Finance and Economic

Colleges are bracing for another year of high demand for financial aid — and that means students need to get their applications in as quickly as possible.

Federal student loans remain plentiful, but other types of aid from states and colleges are more limited. By missing one of the many deadlines, students could receive fewer sought-after grants and scholarships that don’t have to be repaid, and end up having to apply for loans that do.

Blame the continued weak economy for the stiff competition for aid. Unemployment remains high. Families that have burned through cash reserves now are applying for aid for the first time, aid officials say.

In addition, a bumper crop of high school seniors and more people returning to school for advanced degrees will add to the aid demand, says Patricia Nash Christel, a spokeswoman for student loan giant Sallie Mae.

The first step to getting aid is filling out the Free Application for Federal Student Aid at fafsa.ed.gov. It not only will determine your federal aid, but states and colleges also use the FAFSA to award their money.

The earliest you can submit a FAFSA is Jan. 1. States and schools set their own deadlines for when the FAFSA must be submitted.

Schools often set priority deadlines so applications submitted by that date will be the first batch looked at. Deadlines can differ widely, so check your school’s website.

Parents often want to file their tax returns before filling out the FAFSA. Although having an up-to-date tax return makes filling out the application easier, it’s better to get the application in by the deadline using last year’s tax return and then correcting the information later.

Besides the FAFSA, many schools are creating their own aid forms or requiring families to submit additional documents to make sure the aid is going to students in need.

What if you blow all the deadlines? You can still qualify for federal Stafford student loans by submitting the FAFSA any time during the academic year.

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In an aggressive effort to highlight their growth and health at a time of challenge for all publishers, The Business Journal Serving Greater Milwaukee and the 39 other papers in the American City Business Journals group this week took a novel approach to tell their story: All 40 business journals printed a four-page “wrap” around their papers filled with statistics and testimonials from readers in their local markets, detailing the niche their papers fill in each of their communities.

To see the wrapper, click here.

The testimonials highlighted ways that their papers have connected them to new sales, new jobs, and new ways to grow their businesses, and most recently, ways to tap government stimulus dollars. The national campaign cites statistics that include recent numbers for paid circulation, time spent reading business journals, and event attendance.

Collectively, the papers gained in paid circulation by 3.85 percent between 2005 and 2009, while daily newspapers in those same markets lost 18.81 percent in the same years, according to Audit Bureau of Circulations publisher statements. From 2007 to 2009 alone, the ACBJ circulation growth totaled 2.7 percent, according to ABC figures.

Nationally, ACBJ readers spend an average of 50 minutes reading their local business journal each week, according to media audits.

And through 2009, about 175,000 business leaders have attended business journal events across the country.

The campaign has linked the papers together under a single message that asks, “Who Do You Want To Meet Today?” That message centers on the way each paper connects business leaders with each other, via print, in person, at events, or online through the bizjournals pay day loans.com network of local business journal sites.

ACBJ newspapers reach 4 million readers each week with in-depth coverage of their business communities. ACBJ cites recent research as evidence of the sweet spot it occupies in the media: 83% of all business news is local. Further, the company attributes it commitment to exclusive, top-quality journalism as vital to its success.

“No one in the local business community is more connected, more aware, more in touch than business journals are,” says ACBJ CEO Whitney Shaw, in a Q&A offered in each paper’s four-page wrap. “We're giving vital, up to the minute information to corporate executives, small business owners, community leaders, to virtually anybody who has a stake in the economy. And we're giving that information with a depth they can't get anywhere else.”

ACBJ is a unit of Advance Publications Inc., which also operates Conde Nast Magazines, Parade magazine, Fairchild Publications, the Golf Digest companies, Newhouse Newspapers and cable television interests.

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BP Plc beat third-quarter earnings forecasts by a big margin as its cost-cutting program proved more successful than expected, prompting the British oil major to increase its target for savings for the year.

Dealers said they expected the London-based company’s shares to open 3 percent higher on the earnings.

BP said third-quarter replacement cost net profit, which strips out unrealized gains or losses related to changes in the value of fuel inventories, fell 50 percent to $4.98 billion, due to lower oil and gas prices.

Excluding one-offs, the result was $4.67 billion, compared to an average forecast of $3.16 billion from a Reuters poll of 11 analysts.

A lower-than-expected tax rate flattered the result but reductions of over 15 percent in costs in the oil and gas production and refining units was the key driver of the better-than-expected earnings, a spokesman said.

“These results demonstrate real operational momentum across the company. We continue to transform our cost base,” Chief Executive Tony Hayward said in a statement.

The strong progress on squeezing out costs could boost investor optimism about cost-cutting programs at rivals such as Royal Dutch Shell, which reports on Thursday.

The company said oil and gas production averaged 3.917 million barrels of oil equivalent per day, up 7 percent compared to the same period in 2008.

BP said its debt-to-equity or gearing ratio fell in the quarter, against expectations that it would rise.

BP and its rivals had been borrowing this year to meet high dividend payments, or in some cases, cutting their dividends.

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Missouri’s struggling dairy farmers are asking Gov. Jay Nixon to call a special session of the state Legislature so lawmakers can approve emergency funding to help keep them in business.

The farmers asked in August for a nearly $16.5 million emergency payment from federal stimulus funds but were told that only the Legislature could approve distribution of the funds, not the governor, according to the Missouri Dairy Association.

The association is pointing to lawmakers in other states who are trying to secure funds from the $787 billion stimulus package for dairy farmers in their states. About $1 billion of that package is eligible for states, according to association leaders.

Dairy farmers are facing their worst economic crisis in decades, with prices $5 below the cost of production, per hundred pounds of milk. The state has about 2,000 dairy farmers with an economic impact of roughly $1.5 billion, the association said.

Jon Hagler, head of the state’s Department of Agriculture, said in a statement Friday: "Producers in Missouri have been faced with challenges and continue to struggle during these hard economic times.

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The G20 will promise this weekend to keep economic support packages in place until recovery is certain and seek to reassure financial markets they have credible plans to withdraw the stimulus when appropriate.

With finance ministers and central bankers from the Group of 20 developed and emerging nations meeting in London, a document obtained by Reuters on Friday showed the International Monetary Fund has revised up its forecast for the world economy this year and next.

The IMF now forecasts global shrinkage of 1.3 percent in 2009, a shade less than its April forecast of a 1.4 percent contraction, and growth of 2.9 percent in 2010, revised up from 2.5 percent previously.

Policymakers are cautious about declaring victory yet, especially given most major economies are still shrinking this year and only expected to post sluggish growth next year.

“Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and unemployment,” said IMF chief Dominique Strauss-Kahn at a conference in Berlin on Friday.

Ministers laying the groundwork for a G20 leaders’ summit in Pittsburgh are also expected to discuss putting curbs on bank bonuses, tighter financial regulation and reform of international institutions.

G7 sources have told Reuters that the G20’s communique, due on Saturday, will likely maintain the pledge to keep policy accommodative for as long as was needed.

“The biggest risk is to think that the job’s done — that recovery is guaranteed. No country can be complacent — we’ve got to see this through,” British finance minister and meeting host Alistair Darling said late on Thursday Business Card Holders.

Still, with interest rates at record lows and trillions of dollars thrown into their economies to fight the crisis, policymakers are keen to show they have exit strategies in place lest financial markets take fright that inflation will rocket and public finances fall apart.

“Now is not the time to exit. But I would like to make it clear that the ECB has a strategy, and we stand ready to put it into action when the appropriate time comes,” said European Central Bank President Jean-Claude Trichet said in Frankfurt.

BONUS CURBS

With unemployment likely to rise for some while and eat into government poll ratings, the politicians are also looking for someone to blame and will stress that banks cannot return to business as normal.

France, Germany and Britain on Thursday put forward joint proposals to change the bonus culture at banks that many say was the root of the current crisis. These include deferrals and subjecting payments to clawback but fall short of the tax being advocated by some charities and initially the French.

Ministers will look at enhanced regulation of systemically important banks and ways in which these institutions can be wound up if needed without shaking the financial system.

U.S. Treasury Secretary Timothy Geithner is pressing the G20 to back tough new international standards for bank capital and liquidity. The U.S. Treasury said on Thursday a comprehensive agreement should be reached by the end of 2010, with countries implementing the standards by the end of 2012. 

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Andre Campbell isn’t short on job experience. At age 27, he has poured coffee for Tim Hortons, mowed lawns, sorted recycling and cooked fast food, among numerous other jobs.

"I’ve learned a lot of random, general labour things – anything I could do with my hands," he said.

But even with experience, Campbell is struggling to find work. In seven months of looking, he’s had just two interviews.

For young job seekers, this summer has been a cruel one. For students, it’s been bad enough to break records. The unemployment rate for students rose sharply to 20.9 per cent in July, Statistics Canada said yesterday in its latest report. That’s up from 13.8 per cent from July 2008 – and the highest level since the government started tracking it in 1977.

"The stars were aligned about as badly as they could have been for the summer market this year, whether it was the currency, the weather, or the underlying economy," said Doug Porter, deputy chief economist for BMO Capital Markets. "It’s tough to imagine a worse set of circumstances for student employment."

Overall, the jobless rate held steady at 8.6 per cent for July. That may sound positive, but details in the report are discouraging:

Toronto’s unemployment rate roared into double-digit territory, hitting 10 per cent for the first time since 1994. The GTA now has the fourth-highest unemployment rate in the province – and the country.

The economy lost 44,500 jobs – a lot more than expected. That casts doubt on the Bank of Canada’s hope that economic recovery will take hold in the second half of this year.

Some 54,000 Canadians dropped out of the workforce entirely. They were so discouraged that they just gave up looking for a job.

Speaking to reporters in Regina, where he is attending the Council of the Federation meeting, Premier Dalton McGuinty said Canada’s national unemployment statistics were "a hopeful sign" for Ontario.

Peter Walker, 22, an aerospace engineering student, started the summer hoping for work in his field, but then broadened his search to "anything," he said.

With just a few weeks to go until classes resume, he’s still looking, "but after three months of not finding anything, it’s more of going through the motions. I really don’t believe anything is going to come up."

Nisha Mahadjeri, 17, hasn’t had any luck finding summer work. The high-school student left a job selling shoes three months ago to look for something better. Since then, she’s taken short stints at McDonald’s but hasn’t found what she wants.

Young workers are at a disadvantage compared to their older counterparts, and a recession only makes it worse, as more experienced workers start competing for the same jobs, said John-Frederick Cameron, a vice-president at Youth Employment Services.

"For the same amount of money, employers can get the 35-year-old who’s got the experience, who’s got the degree," Cameron said.

"It’s just a recipe for disaster online payday loans."

He said the agency has seen nearly double the number of youths looking for work in the last year.

StatsCan defines students as those between the ages of 15 and 24 "who attended school full-time in March and who are planning to return to school in the fall."

For other youth in the same age bracket, the jobless rate is much lower, 13.4 per cent, but still much higher than the national average.

This summer, the industries that typically employ students, restaurants, catering, hospitality, tourism and construction, cut back on hiring because of the recession.

In Toronto, the sharp climb in the jobless rate, to 10 per cent in July from 9.6 per cent in June, came as the tourism sector struggles with a strong Canadian dollar and new passport requirements that may be keeping visitors away, as well cool, wet weather that tends puts a damper on summer spending.

"Toronto is important for the tourism sector, and tourism has been hammered by this downturn. We rely on visitors from abroad and the strong currency isn’t helping," economist Porter said.

The weakness in construction also weighed heavily on the city.

Windsor has the highest unemployment in the country, 15.2 per cent, followed by London at 10.9 per cent and 10.5 per cent in St. Catharines-Niagara. These communities that have seen steep job losses as automotive and manufacturing plants cut production and, in some cases, shut their doors.

StatsCan measures unemployment for what it calls the Toronto CMA, or census metropolitan area, which extends from Milton in the west to Ajax on the east side, and north to Georgina.

The StatsCan report found that the private sector shed 74,900 jobs in July, and the public sector lost another 4,400. Those losses were offset as 34,800 people joined the ranks of the self-employed.

That gives a net loss of 44,500 jobs for the month – far more than the 7,400 the economy lost in June.

"The Bank of Canada is talking about the recession ending in the third quarter, but (this) certainly suggests there is still quite a bit of weakness embedded in the economy," said Beata Caranci, director of economic forecasting for TD Economics.

Economists expect unemployment to go up, even as the economy starts to recover, "but the magnitude of the job losses at least should be tapering, and that didn’t happen in this report," she added.

But the overall unemployment rate didn’t budge because of the number of people who dropped out of the workforce. That lead to a decline in what’s known as the participation rate, which was holding at just below 68 per cent. It dropped another 0.3 per cent in July, to 67.2 per cent.

Meanwhile, in the U.S., the pace of job losses slowed more than forecast in July and the unemployment rate dropped for the first time since April 2008, the clearest signs yet that the worst recession since the Great Depression is easing.

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British Airways said on Friday it saw no improvement in bleak trading conditions and vowed to continue to cut costs, rounding off another miserable week for Europe’s airlines.

“Trading conditions continue to be very challenging, with … no visible signs of improvement. Our work to reduce costs is beginning to bear fruit, but there is much more to be done,” Chief Executive Willie Walsh told reporters.

The carrier’s revenues fell by over 12 percent in the three months to end June to just under 2 billion pounds ($3.31 billion), though its two main rivals Air France-KLM and Lufthansa fared worse, reporting sales down 20.5 and 19.5 percent, respectively, earlier in the week.

BA shares were up 4.6 percent at 140.5 pence at 0942 GMT as the market was comforted that there no new shocks, though they are still down 20 percent this year.

Airlines around the world are suffering heavy losses due to a slump in passenger numbers and volatile fuel prices.

Low-cost airlines Ryanair and easyJet are performing better as they steal cost-conscious business customers and as holidaymakers opt for cheaper short-haul breaks over long-haul. Both companies are set to end the year in the black, unlike most full-service airlines.

GRIM READING

BA said its first-quarter operating loss was 94 million pounds, below the “around 100 million” guidance given earlier in July. It is the first time the airline has ever made a loss in the April-June period.

“The numbers from British Airways, whichever way you slice them, make grim reading instant cash advance. They are pulling out all stops in order to remain viable as a business, but an uncertain economic outlook, a pension deficit and delayed merger talks are factors that are going to weigh on the company for the foreseeable future,” said Manoj Ladwa, senior trader at ETX Capital.

Willie Walsh said BA had cut operating costs by around 6.6 percent since last October and shed 1,400 jobs since the end of March as it fights to slim down during the downturn, with more to come.

The carrier has been attempting to wring pay cuts from its workforce and has even axed meals on some short-haul flights, though it is no closer to resolving a battle with trade unions representing cabin crew and ground staff, which could end in major strike action.

“The talks are still ongoing, but are in a cooling-off period,” Walsh told reporters.

He added that he had recently had a meeting with Antonio Vazquez, his newly appointed opposite number at Spain’s Iberia, a long-standing potential merger partner.

“We had a constructive meeting. It was an opportunity to congratulate him on his appointment and confirm with one another our desire to proceed with the proposed merger,” Walsh said.

British Airways said its full-year fuel bill was expected to be between 450 million and 500 million pounds lower than last year, while its debt pile also fell slightly to 2.3 billion pounds. 

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Intel Corp’s quarterly results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia, setting an auspicious tone for the technology sector.

Shares of Intel, the world’s largest chipmaker, jumped 8 percent on the report, driving Standard & Poor’s 500 stock index futures sharply higher and bolstering technology shares such as arch rival Advanced Micro Devices Inc.

Intel projected third-quarter revenue at $8.1 billion to $8.9 billion, compared with analysts’ average forecast of $7.8 billion, according to Reuters Estimates.

CFO Stacy Smith said fourth-quarter gross margins could scale the high end of a “normal” range — which Intel defines as 50 to 60 percent — due partly to declining production costs for new generations of chips and other factors.

Intel’s strong showing came despite what it described as weak demand from the corporations that traditionally are big buyers of computer equipment, and comments by Intel executives that Microsoft’s forthcoming Windows 7 operating system is unlikely to revive corporate spending this year.

“You have an $8 billion quarter with very little enterprise spending taking place,” said Broadpoint Amtech analyst Doug Freedman. “The consumer is healthier than we expected.”

Excluding charges for a European antitrust fine, Intel said it earned 18 cents a share in the second quarter, beating the average forecast of 8 cents according to Reuters Estimates.

Revenue in the three months ended June 27 was $8 billion, down 15 percent year-over-year, but well above the average $7 online cash advance.27 billion expected by analysts.

Smith told Reuters that computer markets were strengthening and there were “pockets of relative strength” in consumer PC markets, as well as in the Asia Pacific and in China.

The company forecast third-quarter gross margin at 53 percent, plus or minus 2 percentage points, an improvement from the second quarter’s 51 percent.

“They guided gross margins for the third quarter of 53 percent and the whisper was 50 percent to 51 percent. A nice way to kick off earnings season for tech companies,” said Patrick Wang, an analyst at Wedbush Morgan.

TECH SHARES UP

Intel posted a second-quarter net loss of $398 million, or 7 cents a share — its first quarterly loss since 1986 — after taking charges linked to a $1.45 billion fine imposed by European regulators, which ruled in May that Intel abused its market position to squeeze out AMD. Intel intends to appeal.

This time last year, Intel earned $1.6 billion in net income, or 28 cents a share.

Intel has felt the effects of the recession and a slowdown in IT spending, though Chief Executive Paul Otellini said in April that PC sales had “bottomed out” in the first quarter and that the industry was returning to seasonal business patterns. 

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GRANITE CITY — In this gritty steel town, the coconut cream pie and twice-baked potatoes at Jerry’s Cafeteria serve as unlikely gauges of the national economy.

During the boom times, back when the steel mill hummed with the metal sheets to make all the new cars and fridges consumers were snatching up with easy credit, the pies and potatoes really moved. Same for the fried chicken and Jell-O salad and breaded pork chop, too.

"Going gangbusters," recalls cafeteria owner Jerry Roderick.

The same term is used by steel workers to describe what was happening a couple of blocks down at Granite City Works, the massive steel mill with soaring cobalt-blue walls so large that they appear to envelop the town.

More than 2,000 people worked there. An additional 4,000 held jobs related to the mill. They all needed to eat. And they did not have to go far. You can see the plant’s smokestacks from Jerry’s parking lot.

And then … You know what happened. People stopped buying much of anything. Manufacturers stopped needing steel. In December, the steel mill was idled. Almost everyone was laid off.

"And it all rolled downhill," Roderick says.

It rolled downhill and across city streets, a wave of economic bad news hitting everything in sight, down 20th Street and over to Edison Avenue, where Jerry’s sits in a low-slung block building with newspaper racks and a daily specials sign out front.

"It was like someone closed the door," says Roderick, 67, whose parents opened a restaurant in Granite City in 1945. He started the cafeteria in 1986.

Sitting in his office behind the kitchen, past a wall plastered with his grandchildren’s photos, a rack of pies cooling outside his door, Roderick wonders how long he can hold on. Six months? A year? Things need to turn around. It’s the mindset everywhere, from the steel mill’s corporate offices across the street to the union hall — across the nation, too. How long can this go on?

One sign of hope: Union officials said recently that they expect nearly half of the steel mill’s workers to be rehired soon. But a full recovery could take several months, possibly years.

Roderick has never seen it like this.

He is missing not just the steel workers.

He misses the salesmen no longer stopping by for a bite between calls to the steel plant.

And the outside warehouse workers.

And the truck drivers picking up meals-to-go before hauling away another batch of steel.

"They’re gone," Roderick says, wistfully.

Roderick still does a decent Sunday business. Lots of churchgoers. Catering for weddings "has been pretty good fast payday loans. Don’t know if in another six months that’s going to be true." He’s found a market catering to pharmaceutical sales reps visiting doctors’ offices. He still sees the familiar faces from the local engineering firm, the law firm girls, workers from City Hall and the Prairie Farms dairy.

"The lunch business is kind of there," Roderick says. "It’s puny. But it’s there."

Walking into Jerry’s Cafeteria, it smells like melted butter and green beans. The food line is at the back, past the dining room’s green carpet, red chairs and tables. White trays on the right. The salads — fruit, lettuce, Jell-O — are first. Then the fried chicken and the vegetables. Then the pies. Fifteen different varieties. Banana cream. Chocolate cream. Custard. Pecan. Cherry. $1.95 a slice.

Cafeterias like Jerry’s seem to belong to another era. Roderick reads the newspaper obits and says, "I think I’m losing another customer." Young people have been slow to take up the slack. But he has hung around.

So have his workers. Some have been with him more than 20 years. Roderick has tried to avoid layoffs, instead cutting hours here and there.

"You feel you have an obligation to keep them employed best you can," he says.

But the tough times had to be passed on in some way. So last month he posted a sign in the window: "Due to the economic downturn, we will no longer be making donations until further notice."

No ad this year in a Catholic church’s family digest. No money for the Shrine Club. Or various golf tournaments. People asked for money to send a local hockey team to Russia, and sponsor their daughter in a contest, and fund a local softball team. No, no, no.

"It seemed like everyone was coming to us at one time," says manager Sheila York, who has worked at Jerry’s for 24 years.

"That’s all out the window," Roderick says.

Roderick still feeds people who show up at his cafeteria hungry but too poor to pay. He was out there with free coffee and doughnuts during a steelworkers rally earlier this year.

And the steelworkers have not forgotten Jerry’s Cafeteria.

Vicky Guth was laid off from Granite City Works in December. Money is tight. But when she goes out to eat, she makes a point of stopping at Jerry’s for the twice-baked potatoes.

"It’s just one meal," Guth said. "But it’s going to give them some hope."

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WASHINGTON–Households pushed their savings rate to the highest level in more than 15 years in May as a big boost in incomes from the government's stimulus program was devoted more to bolstering nest eggs than increased spending.

The higher savings rate is healthy in the long term, economists said. But without vigorous consumer spending, the government may have to do more to revive the economy, possibly through further tax breaks and spending.

The Commerce Department said Friday that consumer spending rose 0.3 per cent in May, in line with expectations. But incomes jumped 1.4 per cent, the biggest gain in a year and easily outpacing the 0.3 per cent increase that economists expected.

The savings rate, which was hovering near zero in early 2008, surged to 6.9 per cent, the highest level since December 1993.

The income increase reflected temporary factors relating to the $787 billion economic stimulus program that President Barack Obama pushed through Congress in February to fight the recession. That program included one-time payments to people receiving Social Security and other government pension benefits.

"Personal tax cuts and government income support have brought consumers back from the dead, but the recuperation period promises to be a long one," said Sal Guatieri, an economist at BMO Capital Markets.

The big jump in the savings rate also made Wall Street investors nervous. The Dow Jones industrial average lost about 60 points in morning trading. Broader indices also edged down.

The stimulus package also featured reductions in payroll tax withholding designed to get people to start spending more money and boost the economy. Those factors helped increase after-tax incomes 1.6 percent in May. However, without the special factors, after-tax incomes would have risen just 0.2 percent.

The savings rate, which is a percentage of disposable income, rose to 6.9 per cent from 5.6 per cent in April. Last month's savings rate was far above recent annual rates, which dipped below 1 per cent from 2005 through 2007 as a booming economy and soaring home prices pushed Americans to spend most of what they earned.

Those factors have been reversed amid the longest recession since the Second World War. Triggered by a housing bust, the downturn has depressed home prices by the largest amounts since the Great Depression.

Still, private economists viewed the 0.3 per cent rise in spending in May as encouraging after no change in April and a 0 payday loans.3 per cent drop in March. April had originally been reported as a drop of 0.1 per cent. It was the best monthly performance since spending rose by 0.4 per cent in February.

Consumer spending is closely watched because it accounts for about 70 per cent of total economic activity. Economists are hoping that improved spending will help support a rebound in economic activity.

Nigel Gault, chief U.S. economist at IHS Global Insight, forecast that consumers would remain cautious going forward but that even dampened increases in spending should be enough to jump-start economic growth.

"We do expect spending to creep slowly higher in the second half of the year as the labor market deterioration becomes less severe," he said in a research note.

The government reported Wednesday that the overall economy, as measured by the gross domestic product, shrank at an annual rate of 5.5 per cent in the January-March quarter, slightly less severe than the 5.7 per cent decline estimated a month ago.

However, the 5.5 per cent drop in the first quarter followed a 6.3 per cent decline in the last three months of last year, the worst six-month performance for the GDP in more than a half-century.

Economists believe that the 0.3 per cent rise in spending in May will help bolster the economy in the second quarter and will translate into a smaller drop in GDP of around 2 per cent during this period. Economists believe that GDP will begin growing again in the second half of this year, signaling an end to the recession that began in December 2007.

However, the rebound is expected to be subdued. That's because unemployment, already at a 25-year high of 9.4 per cent, is expected to continue rising, pushing worried households to save even more against the threat of further layoffs.

Reduced spending has been tough on the nation's retailers, who have been forced to lay off workers and shut stores. Drugstore operator Rite Aid Corp. said Wednesday that it narrowed its fiscal first-quarter loss by closing stores and trimming other operating costs as it works to eliminate $6 billion in debt.

Still, the weak economy has kept a lid on prices. An inflation gauge tied to consumer spending edged up 0.1 per cent in May compared with April.

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