Economy's first quarter woes, the Fed's forecast for a rise in interest rates and Walgreen's possible prescription to boost its bottom line top the day's roundup of top business stories.
Severe Winter Puts the Big Chill on U.S. Economy
The U.S. gross domestic product fell at a 2.9 percent annual rate for its worst performance in five years, the Commerce Department reported Wednesday. Growth has now been lowered by 3 percentage points since the government's first estimate was published in April.Analysts blamed the severe and prolonged winter for the economy's first quarter woes, but data on employment, manufacturing and services sectors point to a sharp acceleration in growth early in the second quarter, The Chicago Tribune reports.
May Durable Goods Drop 1 Percent
A sharp drop in demand for military equipment drove a 1 percent drop in May for orders for U.S. durable goods, USA TODAY reports. The Commerce Department, which released the report, said that, excluding defense, orders rose 0.6 percent in May after falling 0.8 percent in April. Factories reported higher demand for steel and other metals, computers, and autos.
Walgreen’s Prescription for Profits: A Move Overseas?
Walgreen’s CEO Greg Wasson said Tuesday that the company is “looking at everything,” including moving its headquarters overseas, to give its bottom line a shot in the arm. In a conference call with analysts Tuesday, Walgreen’s also withdrew its profit goals for its 2016 fiscal year, The Chicago Tribune reports. Walgreen’s paid $6.7 billion two years ago to buy a 45 percent stake in Switzerland-based Alliance Boots, with an option to buy the remainder of the company before 2016. The company is facing shareholder pressure to relocate to Europe after it completes the expected takeover, which would allow Walgreen’s to take advantage of a lower corporate tax rate. The company’s quarterly results, released Tuesday, fell short of Wall Street expectations.
Mid-2015 Interest Rate Hike “Reasonable”: Fed
The Federal Reserve is forecast to start to raise short-term interest rates around the middle of 2015, William Dudley, president of the New York Federal Reserve Bank told a Puerto Rico accounting group on Tuesday. “But, you know, forecasts often go astray,” he cautioned. Dudley added that the U.S. unemployment rate—currently at 6.3 percent—could still get lower without triggering an inflation problem. Dudley's comments, which often reflect dominant sentiment at the Fed, suggest the central bank is in no hurry to raise rates from their current near-zero level once it winds down its bond-buying stimulus later this year, Reuters reports.
George Lucas Museum: The Force is with Chicago
San Francisco tried to land the proposed George Lucas museum, but in the universe of the “Star Wars” creator there is no try. There is only do. Or do not. On Tuesday, Chicago did with its announcement that it had landed the future home for Lucas’ epic collection of art and movie memorabilia. The museum is projected to open in 2018. While Lucas is a native of Modesto, Calif., he recently married a Chicagoan and lives there part time. The city also has the advantage of being a major tourist draw. And Mayor Rahm Emanuel (whose detractors compare to Darth Vadar) certainly used his own version of Jedi mind tricks to sway Lucas. Lucas is No. 296 on Forbes’ list of the world’s billionaires. He is worth an estimated $5.1 billion.