Political Gridlock Hits Jobs, the Economy
Morning Business Memo:
Gridlock in Congress may be taking a big bite out of job creation and the U.S. economic recovery. Corporate America is sitting on vast amounts of cash, waiting to see whether politicians in Washington will work out their big differences over the fiscal cliff and budget. The New York Times reports: "A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months." Many economists and business experts speak of the rising toll of political gridlock. "The private sector could be doing a lot more but because of a great deal of uncertainty on the domestic policy front and in Europe, they are just sitting on capital. And we just have total gridlock in Congress," Karen Tramontano, CEO of Blue Star Strategies and former deputy chief of staff for President Clinton, told Politico.com.
Promotion commotion! Southwest Airlines says it has begun sending refunds to customers who were accidentally billed multiple times for a single flight after an online ticket promotion backfired. The special sale, designed to celebrate Southwest's reaching the 3 million mark in Facebook fans, was supposed to give customers who booked flights on Friday a 50 percent discount on certain fares. Instead, hundreds of frustrated would-be fliers wound up posting stories on social media about how their credit and debit cards had been repeatedly charged, in some cases 20 or more times.
A blockbuster week for stock IPOs: One of the world's top soccer clubs is set to make its stock market debut this week, along with the companies behind Outback Steakhouse restaurants and the Carl's Jr. and Hardee's fast-food chains. Manchester United Ltd. is slated to go public with an offering that looks to bring in $300 million. Bloomin' Brands, which operates Outback, is looking to raise $300 million in its initial public offering. CKE, which runs the two hamburger eateries, is eyeing a $200 million raise.
It's been one year since US Government bonds lost their triple A rating. Many experts predicted that the downgrade would push up borrowing costs. The opposite has happened. Bond prices soared as the yield on US Treasuries fell to new lows. A year ago the 10 year Treasury note yield was 2.40%. Now it's less than 1.6%. Cheaper borrowing costs are a plus for most consumers, especially those who are able to refinance their mortgages.
The battered trading firm Knight Capital Group reportedly has a deal to secure $400 million in financing. This would enable the firm to avoid bankruptcy days after a software glitch shook the market. Several private equity firms and TD Ameritrade are reported to have agreed to buy shares well below their market value.
Richard Davies business correspondent ABC News Radio