The U.S. economy, weighted down by record trade deficits, saw growth slow to an annual rate of 1.6 percent in the spring -- worse than previously estimated and the smallest gain in four years.
But many private economists believe the slowdown reported today by the Commerce Department was only a brief pause. They are looking for growth to rebound in the current July-September quarter to a sizzling rate of 4 percent or higher.
The 1.6 percent second-quarter increase in the gross domestic product -- the total output of goods and services -- from April through June marked the slowest growth since the spring of 1995 when the economy grew at a 0.4 percent rate.
New home sales up 2.9% in month
WASHINGTON -- Sales of new single-family homes unexpectedly surged 2.9 percent in August to a seasonally adjusted annual rate of 983,000 units, the second-highest level on record, the Commerce Department said.
The increase occurred despite rising mortgage rates and surprised analysts expecting a decline. In July, 955,000 units were sold, reflecting a sharp downward revision from the government's previous estimate.
Clinton suggests forgiving debt
WASHINGTON (AP) -- President Clinton pledged Wednesday to forgive all the debt owed the United States by 36 of the world's poorest countries, lamenting that nearly 40 million people die of hunger each year and 1.3 billion people struggle on less than $1 a day.
"Simply put, unsustainable debt is helping to keep too many poor countries and poor people in poverty," Clinton said. He said the United States could not in good conscience ask impoverished nations to choose between making interest payments on their debt or investing in education.
Microsoft begins bid to improve Web
NEW YORK (AP) -- Trying to gain the edge over Internet rival RealNetworks, Microsoft Corp. organized a collaboration with 35 companies to improve the quality of video and sound transmitted to people with high-speed Internet connections.
The goal of the partnership, unveiled Wednesday, is to hasten the adoption of high-speed Internet access by consumers.
Nabisco to buy Favorite Brands
PARSIPPANY, N.J. (Bloomberg) -- Nabisco Holdings Corp., the maker of Oreo cookies and Ritz crackers, agreed Wednesday to buy struggling Favorite Brands International Inc. for $475 million in cash, a move that would make it the leading U.S. producer of non-chocolate candy.
Favorite Brands, the largest U.S. maker of marshmallow products, has sales of about $700 million a year with products that include Jet Puffed marshmallows, Trolli gummi candies and Farley's candies. The Bannockburn, Ill.-based company filed in March sought bankruptcy court protection from creditors.
The purchase would place Nabisco, already the leading U.S. cookie and cracker maker, above Hershey Foods Corp. in the non-chocolate candy business with about a 20 percent share, analysts said.
In other business news . . .
European Union regulators on Wednesday approved Exxon Corp.'s $82 billion purchase of Mobil Corp. after securing antitrust concessions in the deal to create the world's largest oil company.
Yields on two-year Treasury notes rose in Wednesday's auction to the highest level in three months. The yield was 5.665 percent, up from 5.557 percent at the last auction on Aug. 25.
La-Z-Boy Inc., the No. 1 U.S. maker of reclining chairs, agreed to buy Ladd Furniture Inc. for $299.3 million in stock and assumed debt to create the largest publicly traded residential-furniture company..
Cummins Engine Co., the world's largest maker of high-power diesel engines with a plant in Jamestown, said Chairman and Chief Executive James Henderson will retire Dec. 31 after reaching age 65 earlier this year. Henderson will be replaced in both jobs by President and Chief Operating Officer Theodore "Tim" Solso, 52.
The U.S. Senate unanimously confirmed Federal Reserve Governor Roger W. Ferguson Jr. to be vice chairman of the Federal Reserve Board. Ferguson, 47, has been a Fed governor since 1997.
Nike has lost a legal battle in Spain that has lasted nearly a decade over who has rights to the company name -- the shoe giant or a small sporting goods distributor that owns the Spanish rights to the name for the Greek goddess of victory.