Growth in the U.S. economy slowed sharply in the spring, marking the end, analysts believe, of a two-year stretch of vibrant growth and the start of a period of lackluster gains.
The gross domestic product -- the sum of all goods and services produced within U.S. borders -- advanced at a 1.8 percent annual rate in the April-June period, after shooting up at a 5.5 percent rate during the first three months of the year, the Commerce Department said today.
That was a bit better than the 1.6 percent rate estimated a month ago and the initial 1.4 percent estimate of two months ago. Still, it represented compelling evidence the economy has entered a new phase after growing rapidly -- at nearly a 4 percent rate -- through 1996 and 1997.
The long expansion has reduced the nation's unemployment rate to near a 28-year low and the recent slowdown hasn't yet greatly curbed demand for labor. The Labor Department said today that first-time claims for unemployment fell by 8,000 to a seasonally adjusted 292,000 last week, the lowest level in five months.
In a separate report today, the Commerce Department said orders to U.S. factories rose 1.6 percent to a seasonally adjusted $189.4 billion in August.
However, that unexpected strength was caused mainly by a huge, 15.1 percent surge in transportation orders, including motor vehicles and parts that had been scarce during strikes at General Motors earlier in the summer, and unpredictable aircraft orders.
Outside the volatile transportation sector, orders for all other types of durable goods fell in August by 2.1 percent, the biggest drop since May.
Orders for durable goods -- big-ticket items expected to last at least three years -- are an important signal of how busy factories will be in the months ahead.
Mortgage rates at record low 6.64%
WASHINGTON (Reuters) -- Average commitment rates on U.S. 30-year fixed-rate mortgages fell to a record low of 6.64 percent this week, Freddie Mac said Thursday.
The rate was down from 6.66 percent last week, the mortgage group said. Fifteen-year mortgages fell to an average 6.32 percent in the week, down from 6.35 percent the previous week, their lowest rate since October 22, 1993.
Citicorp-Travelers merger approved
WASHINGTON (AP) -- Federal regulators Wednesday approved the merger of Citicorp and Travelers Group Inc., creating the nation's largest financial services company. The deal offers consumers the promise of one-stop shopping for everything from credit cards and checking to insurance and investing.
Federal Reserve Board approval means "an unmatched capacity to provide customers around the world with services they need," said John M. Morris, spokesman for both companies.
The Citicorp-Travelers merger, first announced in April, won Fed approval by a 5-0 vote with one abstention.
The Justice Department also approved the merger Wednesday after "a thorough investigation," Justice spokeswoman Gina Talamona said.
Mattel stock drops on profit fears
EL SEGUNDO, Calif. (Bloomberg) -- Mattel Inc. shares fell for a third day Wednesday on concern that inventory cutbacks at its largest customer, Toys "R" Us Inc., will hurt profit.
Mattel, the parent of Fisher-Price, fell 2 7/1 6 to 28 3/4 in trading of 4.23 million, more than triple the three-month daily average.
The shares have fallen 12 percent since last week, when Toys "R" Us said it would take a third-quarter charge, close stores and fire employees to reduce costs and compete with lower-priced rivals. In February, Toys "R" Us also said it would eliminate about $250 million in inventory this year to cut costs.
Yields plunge on 2-year T-notes
WASHINGTON (AP) -- Yields on two-year Treasury notes fell in Wednesday's auction to the lowest level in more than four years.
The high yield was 4.615 percent, down from 5.125 percent at the last auction on Aug. 26. It was the lowest rate since two-year notes sold for 4.11 percent on Jan. 25, 1994.
The notes will carry a coupon interest rate of 4.5 percent with each $10,000 in face value selling for $9,978.30.