New US Treasury securities on sale in January

WASHINGTON — The Treasury Department said Wednesday that it expects to start offering investors a new Treasury security with variable interest rates in January. It will be the first new Treasury security in 15 years.

Treasury officials said they hope to be able to tell investors the size of the initial offering in November, providing time for bond traders to adjust their computer systems for the new product.

Offering a variable interest rate carries some risk to the government, which would have to pay more if, as economists expect, rates begin to rise in coming years from the current super low levels. But the government is counting on attracting more investors who will be drawn by the prospect of potentially higher yields.

Treasury officials said they viewed the rate risk as minimal because the bills will basically substitute for short-term Treasury bills which have to be renewed every three months, a frequency that already carries a rate risk for the government.

A final rule describing the new floating rate notes was published Wednesday in the Federal Register. The floating rate notes are the first new product Treasury has offered investors since TIPS, Treasury inflation protected securities, were put on the market more than 15 years ago.

Matthew Rutherford, Treasury's assistant secretary for financial markets, said that Treasury is not currently contemplating any other new products such as a 50-year bond or a 100-year bond. Rutherford said he thinks Treasury's 30-year bond adequately served the needs of investors looking for a longer-term security.

Rutherford told reporters at a news conference that Treasury still believed it would be able to meet its borrowing needs and keep the government operating until sometime after Labor Day when Congress will return from its August recess.

He refused to be more specific about when Treasury will run out of bookkeeping maneuvers to avoid hitting the current $16.7 trillion debt limit but private economists have said Treasury may be able to avoid hitting the limit until late October or early November. Treasury has been using various bookkeeping maneuvers to avoid hitting the borrowing limit since May 17.

Treasury Secretary Jacob Lew is urging Congress to move quickly in September to take away the "cloud of uncertainty" about the nation's ability to pay its bills by increasing the borrowing limit and avoid a repeat of 2011 when a prolonged standoff over the issue between Republicans and the administration rattled financial markets.

Treasury announced Wednesday that as part of its regular quarterly refunding auctions next week it would sell $32 billion in 3-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds.

The money raised would be part of the $209 billion in borrowing it is projecting will be done in the July-September quarter. It has projected $235 billion in borrowing needs for the October-December quarter but that amount will depend on Congress increasing the debt limit.

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Annual Utah outdoor show features lighter gear

SALT LAKE CITY — It's a showcase of technology for everything from socks that can take a beating to water bottles equipped with battery-powered ultraviolet purifiers.

At the world's largest trade show for outdoor gear, one trend this year is lighter or more powerful equipment. The makers of a pint-sized hydrogen battery say it can give a cellphone five complete charges before it needs a recharge itself.

Others are showcasing solar cells that roll up for easy packing. Also on display are featherweight canoes, kayaks and standup paddleboards.

The Outdoor Retailer Summer Market opens for a four-day run Wednesday. More than 1,300 manufacturers and suppliers are packing the floor of a Salt Lake City convention hall, plus three outdoor canopy tents. The summer and winter trade shows have been a mainstay in Utah since 1996, drawing consistently larger crowds, although attendance leveled off this year.

More than 25,000 people are expected at the trade show this week, many of them retailers, who are placing bulk orders for specialty outdoor shops around the world. Exhibitors were unpacking crates Tuesday, displaying a merchandise bazaar that would make a consumer drool — except the public isn't allowed inside.

"This show has morphed into a mecca for the outdoor action-sports world," says Peter Kray, publisher of the Gear Institute of Santa Fe, N.M., a network of outdoor gear testers and experts who try out and promote the best gear.

A number of magazines and websites, including gearjunkie.com, also rate the gear and fashions to come out of the Salt Lake show before the new products hit the mainstream. Kray's picks include Smith Chroma Pop lenses — "awesome color" — and an improvement on Easton tent poles that nearly doubles their strength and flexibility in heavy winds.

Kray also is celebrating a hydration bladder not for water, but whisky or tequila — "perfect," he says.

Even socks have come a long way, with more than 100 companies in a foot race to stich the finest wool blends. A pair can cost $25, but makers say they last practically a lifetime. Cabot Hosiery Mills Inc. says its Darn Tough Vermont socks can withstand 30,000 machine rubs before wearing thin.

The jam-packed expo underscores a thriving corner of the economy. Outdoor-gear sales have grown at 5 percent or more annually through recent years of recession, analysts said.

"The industry is doing well. Patagonia has weathered the storm," said Tania Bjornlie, a trade-show manager for the Ventura, Calif.-based industry giant long known for its sleek outdoor clothing.

Patagonia is showing off a new line of day packs. "Everything at the show is getting more technical, lighter, faster," Bjornlie said.

Utah has become a cottage industry for innovators and established brands including Petzl, best known for its headlamps and climbing gear. Petzl says business is growing steadily: It's opening a new factory in a Salt Lake City suburb.

Outdoor sports "is a passion for a lot of people," said John Evans, a Petzl marketing director. "Even if the economy is not running at full steam, people still pursue their passions."

A hydrogen battery pack the size of a deck of cards can be found at an exhibit for Brunton, a subsidiary of Stockholm-based Fenix Outdoor AB., which specializes in navigation, optics and now, "portable power."

At $150, Brunton's hydrogen battery pack can be recharged at retail shops for $8 a pop. Brunton says the battery takes hydrogen out of water and mixes ambient oxygen when it's time to charge a cellphone or other electronic device.

"It's the lightest, toughest, most portable hydrogen reactor," said Walter Kaihatu, vice president for sales and marketing at Boulder, Colo.-based Brunton. "It has really high capacity. It can charge a cellphone five times from dead, and works in a range of temperatures."

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Report: Fed spending cuts hurt Mass. economic recovery goes

Massachusetts' economy slowed significantly in the second quarter as federal spending cuts restrained the state's recovery, according to a new report.

The state's real gross domestic product grew at an annual rate of 0.8 percent from April to June, while the nation's grew at a rate of 1.7 percent, according to the latest MassBenchmarks Current Economic Index.

State payroll employment grew at an annual rate of 3 percent in the first quarter but stalled in the second quarter, declining by 0.1 percent on an annualized basis, the report said.

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Southern Co. quarterly earnings drop to $297M

ATLANTA — Southern Co. earnings slumped 52 percent to $297 million in the second quarter due mainly to cost overruns at a coal-fired power plant under construction in Mississippi, the company reported Wednesday.

The utility, based in Atlanta, reported earnings of $297 million, or 34 cents per share, from $623 million, or 71 cents per share, a year ago. Earnings would have risen to 66 cents with one-time costs removed. That was two cents shy of Wall Street projections, and the price of company shares dropped less than 1 percent to just over $45 in morning trading.

Company officials announced Tuesday that its shareholders would absorb an estimated $278 million in after-tax losses incurred while building a goal gasification plant in Mississippi's Kemper County. That project has cost the power company $611 million in after-tax charges this year.

Subsidiary Mississippi Power has cautioned that it is still reviewing project costs. Southern Co. CEO Thomas Fanning said the latest charges are the company's best estimate, and he could not guarantee there will not be future losses on the plant.

"I certainly hope not. I can't guarantee it," Fanning said in an interview. "The biggest remaining risk is hitting schedule. As we progress in the construction, obviously we tend to kind of hone in on what the final cost will be."

Excluding one-time costs, Southern Co. would have earned $575 million in the second quarter compared to the $602 million last year.

Project costs in Mississippi have dogged the company for two quarters. In a settlement with Mississippi utility regulators, Southern Co. agreed to cap costs for its customers at $2.4 billion. Customers may still have to pay off as much as $1 billion in bonds needed to finance the rest of the project, though the utility will not make a profit off that borrowed money.

The plant uses first-of-its-kind technology that supporters say will prove the United States can still rely on coal energy even if the country moves to restrict greenhouse gas emissions. Plant Ratcliffe is designed to turn lignite coal into a gas that is then burned to generate electricity. The facility is expected to capture much of the carbon dioxide released in the process. The captured carbon dioxide, a greenhouse gas blamed for causing global warming, will then be sold to companies who use it to extract oil from the ground.

Mild weather in the Southeast and a tepid economy also crimped the power company's earnings, executives said. Sales to retail customers dropped 2.9 percent over last year as unseasonably wet and cool weather cut into demand and reduced the company's margins as swollen rivers produced more energy through hydroelectric generation.

Fanning appeared more confident about the possibility of securing a federal loan guarantee for two nuclear reactors now under construction in eastern Georgia. While the utility earlier secured a preliminary deal to get the federal guarantees, it has not reached a final agreement. Fanning said U.S. Energy Secretary Ernest Moniz seems to view finalizing the loan guarantees as a high priority.

"It certainly has taken on a greater sense of urgency," Fanning said.

Southern Co. has asked Georgia regulators for a $737 million increase in its construction budget for the nuclear plant, which would raise the total to $6.85 billion.

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Follow Ray Henry on Twitter: http://twitter.com/rhenryAP.

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US judge strikes Fed's cap on debit 'swipe' fees

WASHINGTON — A federal judge has struck down a rule setting a cap on the fees that banks can charge merchants for handling debit card purchases, saying the Federal Reserve didn't have the authority to set the limit in 2011.

The ruling by U.S. District Court Judge Richard Leon Wednesday handed a victory to a coalition of retail groups. They had sued the Fed over its setting the cap at an average of about 24 cents per debit-card transaction. The previously unregulated "swipe" fee averaged 44 cents. The Fed initially proposed a 12-cent cap, and the retailers had argued that the Fed buckled under pressure from bank lobbyists when it set the cap higher.

The Fed now must craft a new rule. The current one will remain in effect in the meantime.

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Global stock markets buoyed ahead of Fed statement

MILAN — Strong eurozone unemployment data combined with better-than-expected U.S. jobs and economy figures to give a modest boost to stock markets on Wednesday.

Eurostat figures showed the number of unemployed across the 17 European Union nations fell for the first time since April 2011, providing further hope that the region's economy could soon start showing signs of recovery.

Meanwhile, the U.S. economy grew at an annual rate of 1.7 percent in the second quarter, the Commerce Department said Wednesday. Economists had expected growth of 1 percent for the period. Also Wednesday, a private survey from payroll company ADP showed that U.S. businesses created 200,000 jobs this month.

As welcome as the figures were, markets were also focused on news from the Fed's Open Market Committee meeting. The U.S. central bank will release an updated policy statement after concluding the two-day meeting.

The Fed is not expected to announce any big changes, but investors expect that an improving U.S. economy will prompt the Fed Reserve to ease back on its huge bond-buying program in coming months.

The Fed is buying $85 billion in Treasury and mortgage bonds every month to spur growth and lending. Recent hints that the Fed might start scaling back its stimulus program have sent stocks reeling.

Analysts from Capital Economics said in a note Wednesday that the latest round of U.S. economic figures suggest "that the recovery is gaining momentum and probably strengthening the Fed's resolve to taper its asset purchases in September."

Britain's FTSE 100 rose 0.76 percent to close Wednesday at 6,649. Germany's DAX was up 0.1 percent at 8,275 while France's CAC-40 was up 0.4 percent to 4,003.

Wall Street welcomed the upbeat economic news, with the Dow Jones industrial index up 0.23 percent to 15,525 and the broader S&P 500 rising 0.33 percent to 1,691.

Investors are also focusing on U.S. employment figures for July, due out Friday. Fed Chairman Ben Bernanke has said that the central bank could begin to scale back its bond purchases later this year if the economy strengthens, but Fed officials typically put greater weight on employment and inflation data than the GDP figures.

Japan's Nikkei 225 index tumbled 1.5 percent to close at 13,668.32. The Tokyo benchmark closed down 3.3 percent on Monday and then recovered about halfway Tuesday.

Hong Kong's Hang Seng fell 0.3 percent to 21,883.66. South Korea's Kospi dropped 0.2 percent to 1,914.03.

Benchmarks in mainland China rose while Singapore, the Philippines, Thailand and Taiwan fell.

Benchmark crude for August delivery was up $1.13 to $104.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.47 to close at $103.08 on the Nymex on Tuesday.

In currencies, the euro was 0.25 percent to $1.3292 from $1.3259 late Tuesday. The dollar rose to 98.27 yen from 98.06 yen.

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Pamela Sampson in Bangkok contributed.

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TGI Fridays in NJ fined $500K for switching booze

TRENTON, N.J. — An operator of TGI Fridays restaurants in New Jersey raided as part of Operation Swill has agreed to pay a $500,000 fine for serving customers cheap booze when they paid for top shelf.

Acting Attorney General John Hoffman said Wednesday that the fine levied against Livingston-based Briad Group should send a message to every bar and restaurant in the state that customers should always get what they pay for.

Under terms of the settlement, Briad agreed not to contest charges that eight of its restaurants were selling customers cheap substitutes in place of premium alcohol. It also agreed to employ a state-appointed monitor through June 14 to ensure its restaurants and employees are in compliance.

As long as there are no further violations during that period, the businesses will avoid five-day suspensions of their liquor licenses, the attorney general said.

The fine includes $400,000 for the violations and $100,000 to cover investigative costs.

Twenty-nine establishments, including 13 TGI Fridays, had been accused of cheating customers when the state first announced the raids. The attorney general's office said the state decided to pursue charges against only eight of the TGI Fridays. The other cases remain under investigation.

At one of the 29 businesses targeted, a mixture that included rubbing alcohol and caramel coloring was sold as scotch. In another, premium liquor bottles were refilled with water that was not even clean. The state never identified which restaurants or bars those were.

The eight TGI Fridays included in the settlement are in West Orange, East Windsor, Old Bridge, Piscataway, Freehold, Marlboro, Hazlet and Linden.

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US economy grew at sluggish 1.7 pct. pace in Q2

WASHINGTON — The U.S. economy grew from April through June at an annual rate of 1.7 percent — a sluggish pace but stronger than in the previous quarter. Businesses spent more, and the federal government cut less, offsetting weaker spending by consumers.

The government on Wednesday sharply revised down its estimate of growth in the January-March quarter to a 1.1 percent annual rate from a previously estimated 1.8 percent rate.

Though growth remains weak, the pickup last quarter supports forecasts that the economy will accelerate in the rest of the year. Economists think businesses will step up investment, job growth will fuel more consumer spending and the drag from government cuts will fade. If so, the Federal Reserve could scale back its stimulus later this year.

The April-June growth figure indicates that "the recovery is gaining momentum," Paul Ashworth, an economist at Capital Economics, said in a note to clients.

During the April-June quarter, businesses increased their spending 4.6 percent after cutting by the same amount in the January-March period. And spending on home construction grew 13.4 percent, in line with the previous quarter.

At the same time, the federal government cut spending only 1.5 percent after slashing it 8.4 percent in the first quarter. And state and local governments spent more for the first time in a year.

Still, government cutbacks have weighed heavily on the economy the past 12 months. Over the past four quarters, the economy has grown at just a 1.4 percent annual rate. But if you exclude federal, state and local governments, the private sector has expanded at a much stronger 2.3 percent rate.

The "ongoing fiscal drag is masking private sector health," said Joseph LaVorgna, an economist at Deutsche Bank, said.

The weaker growth in consumer spending last quarter was significant because consumers account for about 70 percent of the economy. And a surge in imports reduced growth by the most in three years.

Yet economists say steady job growth should provide enough money for Americans to spend more and help the economy expand at an annual rate of around 2.5 percent in the third and fourth quarters.

Some signs in the report suggest that companies expect demand to pick up. Businesses added to their stockpiles last quarter — typically a sign that they foresee higher sales.

On Wednesday, the government also released comprehensive revisions that updated the nation's gross domestic product, or GDP, over the past several decades. Those figures showed that the Great Recession wasn't quite as steep as initially estimated and that the recovery has been stronger than earlier thought.

The revisions showed that the economy grew 2.8 percent in 2012, up from an earlier estimate of 2.2 percent. Growth in last year's first quarter was revised much higher. And growth in the fourth quarter of 2012 was reduced to an annual rate of just 0.1 percent.

GDP is the broadest measure of the nation's output of goods and services. It includes everything from manicures to industrial machinery. But the government's comprehensive revisions included changes in how GDP is defined.

Research and development spending is now counted as investment, rather than an expense. So is spending on the development of entertainment products such as movies, music, books and TV shows. Those changes increased the size of the economy by about $470 billion, or about 3 percent, as of the end of 2012.

Pension benefit promises are now counted as income. That's a shift from the previous approach, which counted only actual cash payments by companies and government agencies into pension plans. This change boosted the savings rate by 1.5 percentage points in 2011 and 2012 to about 5.6 percent. In the second quarter, Americans saved 4.5 percent of their after-tax income, up from 4 percent in the first quarter.

Despite the still-sluggish economy, recent data have been encouraging and suggest that growth will strengthen.

Home construction, sales and prices have been growing since early last year. Americans bought newly built homes in June at the fastest pace in five years. That's helped raise builder confidence to a seven-year high, which should lead to increases in construction and more jobs.

Overall hiring has accelerated this year. Employers added an average of 202,000 jobs a month from January through June, up from 180,000 in the previous six months.

A separate report Wednesday pointed to solid job gains in July. Payroll provider ADP estimated that businesses added 200,000 jobs in July, the most since December.

And auto sales topped 7.8 million in the first six months of 2013, the best first-half total since 2007. Analysts expect sales to remain solid the rest of the year.

Unemployment is still high at 7.6 percent, limiting consumer spending. And budget fights in Washington could lead to a government shutdown this fall, potentially disrupting the economy.

Federal Reserve officials have forecast better growth in the second half of the year. And Chairman Ben Bernanke has said the Fed could scale back its bond purchases later this year if the economy strengthens. But Fed officials typically put more weight on employment and inflation data than on GDP figures.

The Fed ends a two-day policy meeting Wednesday, after which it could clarify its interest-rate policies in a statement.

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Follow Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber

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US judge strikes Fed's cap on debit 'swipe' fees

WASHINGTON — A federal judge has struck down a rule setting a cap on the fees that banks can charge merchants for handling debit card purchases, saying the Federal Reserve didn't have the authority to set the limit in 2011.

The ruling by U.S. District Court Judge Richard Leon Wednesday handed a victory to a coalition of retail groups. They had sued the Fed over its setting the cap at an average of about 24 cents per debit-card transaction. The previously unregulated "swipe" fee averaged 44 cents. The Fed initially proposed a 12-cent cap, and the retailers had argued that the Fed buckled under pressure from bank lobbyists when it set the cap higher.

The Fed now must craft a new rule. The current one will remain in effect in the meantime.

A Fed spokesman said there was no immediate comment on the ruling.

The cap is the first-ever limit on debit card fees. Before it took effect in October 2011, banks had negotiated such fees with merchants. A big chain like Starbucks would likely get a better rate than a local coffee shop because it handles more customers. The fees were typically based on a percentage of the purchase price.

The Fed rule was called for by the 2010 financial overhaul law, which was enacted in response to the 2008 crisis. But Leon said in his ruling that the Fed disregarded Congress's intent in passing the law by "inappropriately inflating all debit-card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit-card transaction."

The retailers' lawsuit maintained that the cap is an "unreasonable interpretation" that exceeds the authority given to the Fed by the 2010 law. It also asserted that the Fed wrongly interpreted a provision of the law that requires that merchants have a choice of which bank network handles their transactions.

The retailers complained that the Fed had deviated from the law's intent by allowing additional costs to be factored into setting the level of the cap, costs which exceeded reasonable expenses incurred by banks in debit transactions.

Sen. Richard Durbin, D-Ill., the author of the provision of the 2010 law mandating a cap on swipe fees, called Leon's ruling a "victory for consumers and small business around the country (that) will lead to lower interchange rates for billions of debit-card transactions each year."

Durbin, who is the assistant majority leader in the Senate, had filed a legal brief supporting the retail groups' suit in the case.

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German industrialist Berthold Beitz dies at 99

BERLIN — Berthold Beitz, who was honored for saving hundreds of Jews in occupied Poland during World War II and became one of post-war West Germany's leading industrialists, has died at 99.

Steelmaker ThyssenKrupp AG, where he was the honorary chairman of the supervisory board, announced Beitz's death on Wednesday. It said in a statement that he died Tuesday and gave no further details.

Beitz and his wife, Else, were honored by Germany's main Jewish group in 2000 for saving hundreds of Jewish workers at an oil field he managed in occupied Poland from deportation to Nazi death camps.

German Chancellor Angela Merkel called Beitz one of the country' most distinguished and successful businessmen and stressed his "brave and exemplary support for Jewish workers during World War II."

The President of the German Council of Jews in Germany, Dieter Graumann, said of Beitz: "He was a great man. His humaneness in dark times remains a role model for us today."

"Together with his wife he saved the lives of hundreds of Jews — I wish there had been more people like him," Graumann told The Associated Press. In 2000, the Jewish Council awarded Beitz its highest honor, the Leo-Baeck Award.

In 1973, Beitz was given the Righteous Among the Nations honorific by the Israeli Yad Vashem Holocaust Museum— the highest honor given to a Gentile, or non-Jew, for saving Jews.

Beitz was born on September 26, 1913, in Zemmin in what was then Germany and now belongs to Poland. He studied to become a banker and took a position at an oil field in occupied Poland in 1939.

He saved many of the Jewish workers there from the Nazis' death camps, sometimes by even hiding them together with his wife at his home. The couple had three daughters.

In August 1942, he saved 250 Jews from being deported to the Belzec death camp by claiming they were indispensable to keep up production, according to Yad Vashem's biography of Beitz.

Asked after the end of the Third Reich about his personal motivation, Beitz said, according to Yad Vashem, "There was no anti-Fascism, no resistance. We watched from morning to evening as close as you can get what was happening to the Jews. ... When you see a woman with her child in her arms being shot, and you yourself have a child, then your response is bound to be completely different."

In the 1950s, Beitz agreed to administer the Krupp steel company, which was heavily involved in armaments production during the war. He headed the company in various positions for around 60 years.

In 1967, he launched a foundation with the late Alfried Krupp's fortune, supporting projects in Israel among others.

Until recently, he went to work at his office in Essen in western Germany almost every day, according to German news agency dpa.

In a rare interview with Sueddeutsche Zeitung newspaper in March, he said, "I'm going to continue this as long as I can, as long as I'm clear in my head."

Besides being one of Germany's outstanding industrial leaders, he also was an honorary member of the International Olympic Committee and, via the Krupp Foundation, invested heavily in the arts and the revitalization of Ruhr Valley Region — which used to be West Germany's industrial heartland after the war and the base of steelmaker ThyssenKrupp.

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