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News Corp. Revenue Falls Well Short of Forecasts

A steep drop in Australian newspapers took its toll on the company, which publishes The Wall Street Journal and The Times of London. News Corporation said net income attributable to common shareholders was $27 million for the quarter ended Sept. 30, the first of its fiscal year. That compared with a loss of $92 million in the same quarter last year.

Shares of the company fell more than 2 percent in after-hours trading on disappointment over the $2.07 billion revenue figure, which missed a Thomson Reuters forecast for $2.2 billion in revenue.

“The revenue was clearly weaker than expected,” said Doug Arthur, an analyst with Evercore Research.

On an adjusted basis, the company earned $17 million, or 3 cents a share, missing the consensus forecast of 5 cents.

A steep decline in newspapers in Australia, where Mr. Murdoch was born, weighed heavily on the results.

“The weakness of the Australian newspapers was well known, but the sales decline of 22 percent was even worse than I had expected,” Michael Corty, a Morningstar analyst, said.

In July, News Corporation separated its publishing business from its much more lucrative entertainment assets, including its movie studio, cable and television properties, which are now part of 21st Century Fox.

This is the first time that News Corporation, which retained the name and is based in New York, is reporting as a stand-alone company, which includes the book publisher HarperCollins, Australian pay-TV and digital real estate stakes, and Amplify, a fledgling education unit.

Newspapers are facing difficult challenges because advertisers are shunning them in favor of splashier digital properties and readers are canceling print subscriptions.

Credit Card Use Falls; Borrowing for Cars and School Rises

Consumers increased their borrowing by $10.4 billion in July from June to a record of $2.85 trillion, the Federal Reserve said on Monday. That followed a gain of $11.9 billion in June.

A category that includes auto loans and student loans increased $12.3 billion in July to a record $2 trillion. But a measure of consumers’ credit card debt fell by $1.8 billion to roughly $850 billion. That followed a $3.7 billion decline in the credit card category in June.

July consumer borrowing illustrated economic trends that have surfaced since the recession: Americans are using credit for their most urgent needs, while forgoing debt for discretionary purchases.

The auto and student loan category was up 8.1 percent from a year earlier and rose in every month but one since May 2010. But credit card debt has barely changed in the last year and was nearly 17 percent below its peak, in July 2008, seven months into the recession.

Slow job growth and small wage gains have made many Americans more reluctant to charge goods and services. That could restrain consumer spending, which accounts for 70 percent of economic activity. Americans may also be hesitant to take on more high-interest debt because of higher Social Security taxes.

At the same time, the weak economy is sending more people back to school. The Federal Reserve’s consumer credit report does not separate student loans and auto loans. But the Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest factor in borrowing increases since the recession officially ended in June 2009.

Economists expressed hope that as the impact of higher Social Security taxes fades, consumer spending will strengthen in the second half of this year. That forecast also counts on steady job growth to bolster income gains and support higher spending.

But some forces continue to restrain growth, including thousands of federal furloughs, which depressed income growth in July. And job growth has been weaker than first thought.

The Fed’s borrowing report tracks credit card debt, auto loans and student loans but not mortgages, home equity loans or other loans secured by real estate.

Trade Gap Falls, Hinting At Pickup in U.S. Growth

The Commerce Department said on Tuesday that the United States trade gap fell more than 22 percent, to $34.2 billion, in June from May. That is lowest level since October 2009.

American companies shipped more aircraft engines, telecommunications equipment, heavy machinery and farm goods. As a result, exports rose 2.2 percent to a record high of $191.2 billion.

Imports declined 2.2 percent to $225.4 billion, in part because oil imports fell to the lowest level in more than two years.

Economists said the steep drop in the trade deficit would most likely lead the government to revise its economic growth estimate for the April-June quarter.

“We could see a sizable upward revision,” said Jennifer Lee, a senior economist at BMO Capital Markets.

Last week the government said the economy grew at a lackluster 1.7 percent annual rate in the second quarter, in part because trade cut nearly a full percentage point from growth.

But after seeing the June trade figures — which were not factored into last month’s growth estimate — some economists said growth could be closer to a 2.5 percent annual rate. The government reports its second estimate of growth for the April-June quarter on Aug. 29.

A smaller trade deficit lifts economic growth because it means consumers and businesses are spending less on foreign goods than companies are taking in from overseas sales.

Many economists say they think overall growth has started to rebound in the July-September quarter. Some say growth could come close to a 3 percent annual rate. A crucial reason is that several export markets, including Europe, are seeing improvement.

For June, United States exports to the 27-nation European Union rose 1.5 percent. That helped shrink the deficit with the region to $7.1 billion.

The deficit with China fell 4.3 percent, to $26.6 billion, while America’s deficit with Japan rose 2.2 percent, to $5.5 billion in June.

A Hush Falls Where Rockets Once Roared

The Space Shuttle Atlantis creeps into retirement at the Kennedy Space Center in Titusville, Fla. The town once enjoyed the distinction of being the capital of Florida’s Space Coast. After the Space Shuttle program ended in 2011, and 8,000 people lost their jobs, this boomtown born of the space race started to lose its footing.

Credit: Mary F. Calvert

U.S. Adds Only 88,000 Jobs; Jobless Rate Falls to 7.6%

American employers added an estimated 88,000 jobs to their payrolls last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected.

It also was the start of a third consecutive spring in which employers tapered off their hiring after a healthy start to the year. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is less obvious. The recent payroll tax increase or other fiscal tightening in Washington could be partly to blame for the sudden retreat in hiring, but neither seems to be showing up much yet in other relevant economic data.

“People were starting to believe the economy was really picking up steam, and desperately wanted this report to be better,” said Joshua Shapiro, chief economist at MFR Inc. “But that didn’t happen.”

Economists like Mr. Shapiro cautioned that the numbers, which are adjusted for normal seasonal variations, are volatile from month to month and are still subject to revision.

Nonetheless, the closely watched monthly jobs report was discouraging.

The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for the wrong reason: because more people reported dropping out of the labor force (meaning they are neither working nor looking for work), not because more people were hired.

The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working.

Baby boomer retirements may account for part of the slide, but pessimism about job prospects in a mediocre economy still seems to be playing a large role, economists say.

“The drop in the participation rate has been centered on younger workers,” said Mr. Shapiro, “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

Investors initially responded to the jobs report by sending the major stock market indexes down more than 1 percent. But as the day went on, strategists sent out reports noting that the economic slowdowns in previous years ended up being temporary. The Standard & Poor’s 500-stock index climbed back to end the day down only 0.4 percent.

“Given the noise in the data you don’t want to set your pants on fire about it,” said Michael Feroli, chief United States economist at JPMorgan Chase.

Job gains in March were concentrated in professional and business services and health care.

The government again shed workers, as it has been doing for most of the last four years, though reductions at the Postal Service accounted for most of the latest decline. Economists expect more government layoffs in the months ahead as the effects of Washington’s across-the-board budget cuts make their way through the system.

“While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the nation’s future competitiveness,” Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, said in a statement.

The latest report should quiet speculation that the Federal Reserve will take its foot off the monetary accelerator anytime soon, as some had suggested after a spike in hiring in February. Even before Friday’s numbers came out, though, Fed officials had expressed concerns about not only the pace of job growth, but the quality of hiring as well.

“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech.

She noted that relatively low-wage sectors like food services and retail businesses had accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the recent recession were in the middle range of wages, while a majority of those added during the recovery had been low-paying.

In March, in fact, jobs in food services and drinking places accounted for the largest share of total American employment on record. Today nearly one in 13 American jobs is in this industry.

Ms. Raskin also expressed concern about temporary jobs, which account for a growing share of total employment.

“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the 1990s. “That of course means more flexibility for employers, and less job security for workers.”

Perhaps more distressingly, 7.6 million workers who want full-time work can find only part-time work, and their missing work hours do not count toward the official unemployment rate. The number of such workers fell slightly from February, but is still about where it was a year ago.

A broader measure of underemployment, which includes those reluctantly working part time as well as those who want jobs but have stopped looking, stands at 13.8 percent.

At the same time, long-term unemployment — joblessness lasting more than six months — has been a persistent problem ever since the recession ended in the middle of 2009. And it may be partly driven by the fact that many of the jobs available do not pay well enough to be worth taking.

“When I’ve had offers for positions they’re part time or temporary, but the child care I’d need to pay to take the jobs is more costly than what I’d be getting paid for the job itself,” said Linda Rubiano, 37, of Pennsauken, N.J., a single mother with a 3-year-old boy. She was laid off from her paralegal job, which she had held for five years, in January 2012. “It’s really, really frustrating.”

Getting people like Ms. Rubiano back to work soon is critical to the economy’s future, experts say. In many cases, the longer people stay unemployed, the less employable they become.

“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat,” said Christine L. Owens, executive director of the National Employment Law Project. “We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”

Nathaniel Popper contributed reporting.

Yen Falls as Japan Forms New Government

Asian shares and other assets were capped in thin holiday trade, with investors focusing on the fate of U.S. negotiations to avert a budget crunch looming at the end of the year.

Markets in Singapore, Malaysia, Indonesia, the Philippines and South Korea were closed on Tuesday for the Christmas holiday, reopening on Wednesday.

Hong Kong and Australia remain closed on Wednesday. Europe also will not trade but, U.S. markets reopen later in the day.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent, after rising 0.3 percent the previous day on the back of a surge in Shanghai shares to five-month highs and a jump in Taiwan shares.

Shinzo Abe, whose party won a landslide victory in an election earlier this month, will be sworn in as Japan's premier on Wednesday, when he is also expected to appoint his cabinet. He is prescribing a mix of aggressive monetary policy easing and big fiscal spending to beat deflation and rein in the strong yen.

He has kept up pressure on the Bank of Japan to deliver much stronger monetary easing policies and called for a 2 percent inflation target to beat deep-rooted deflation, pushing the yen to a 20-month low of 85.38 yen on trading platform EBS on Wednesday. Traders eyed the dollar's 2011 high of 85.53 yen as the next target.

The euro rose as high as 112.47 yen on EBS, approaching its 16-month high of 112.59 yen hit on December 19.

The weaker yen has bolstered hopes for better earnings from Japanese companies and underpinned the Nikkei, which has gained some 17 percent since mid-November when the election was scheduled, fuelling expectations for Abe's party to win. The yen has lost nearly 8 percent against the dollar in the same period.

The Nikkei was up 0.4 percent, holding above the key 10,000 mark.

"Most foreign funds have added Japanese shares and there are fewer participants today, but there still is a reason for the Nikkei to rise," said Hideyuki Okoshi, general manager at Chibagin Securities. "Not only exporters but investors are buying other stocks which could benefit under the new government."

Japanese government debt prices fell, with the 10-year bond futures falling to a three-month low of 143.65 in active trade. The 10-year JGB yield rose 1.5 basis points to 0.780 percent, matching a six-week high hit on December 19.

"We continue to see equities going high, so the pressure is on the long end of the JGB curve. For the short end of the curve, we continue to see the BOJ ease aggressively, so there is no change in that," said Tadashi Matsukawa, head of Japan fixed income at PineBridge Investments.

Minutes of the BOJ's policy-setting meeting in November showed on Wednesday that some board members said the central bank must act decisively, without ruling out any policy options, if the outlook for the economy and prices worsens further.

The dollar was also expected to stay firm this week as investors repatriate dollars, and as the U.S. fiscal impasse is likely to continue to sap investor appetite for risky assets and raise the dollar's safe-haven appeal.

President Barack Obama may return to Washington from his Hawaiian holiday as early as Wednesday evening to address the unfinished "fiscal cliff" negotiations with Congress, an administration official said on Tuesday.

House of Representatives Speaker John Boehner failed to gain support for a tax plan at the end of last week, raising fears that the United States may face the fiscal cliff of some $600 billion in automatic spending cuts and tax increases set to start on January 1.

"The main index is rebounding after treading water on Monday and dropping on Friday, as investors eye the progress of U.S. fiscal negotiations," Kim Soo-young, an analyst at KB Securities, said of South Korean shares which turned 0.7 percent higher in low holiday volume.

Activity is likely to remain subdued, with volume low and without major economic news.

Later in the session, Thailand will release trade data, which is expected to show exports in November posting very high annual growth compared with low levels last year that reflected the damage from the flooding.

South Korea's key consumer sentiment index held steady in December from November and stood below the neutral point for a fifth consecutive month, the central bank said on Wednesday, diminishing hopes of a quick economic rebound.

Gold edged lower on Wednesday on uncertainty over whether the fiscal cliff, but a weaker yen sparked a rally in bullion futures on the Tokyo Commodity Exchange (TOCOM).

(Additional reporting by Ayai Tomisawa and Dominic Lau in Tokyo and Joyce Lee in Seoul; Editing by Daniel Magnowski and Chris Gallagher)

Degrees of Debt: Colleges’ Debt Falls on Students After Construction Binges

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Industrial Production in U.S. Falls After Storm’s Disruption

Production at the nation’s mines, factories and refineries contracted 0.4 percent last month, after a 0.2 percent increase in September, the Fed said. It said the storm, which hit the East Coast at the end of October, cut output by nearly 1 percentage point. Utilities and producers of chemicals, food, transportation equipment, and computers and electronic products were the most affected, it said.

Still, the gain in output last month would have been modest even without the storm, with fears about the possibility of higher taxes and sharp cuts in government spending early next year making businesses hesitant to raise output and invest.

Those measures would drain about $600 billion from the economy unless Congress and the Obama administration agree on a plan to soften the blow.

Industrial output contracted in the third quarter for the first time since the 2007-9 recession ended, a hard landing is not expected for the industrial sector.

Economists are divided on whether industrial output will bounce back in November. Some expect the effects of the storm to linger longer.

“Sandy’s impact is also likely to be felt in the November industrial production data as power outages and other disruptions in the Northeast persisted into the second week of the month,” said Jeremy Lawson, an economist at BNP Paribas in New York.

Last month, utilities output fell 0.1 percent, even though parts of the Northeast lost power during the storm. Utilities production was flat in September. Production at mines increased 1.5 percent after rising 0.9 percent the previous month.

The amount of factory capacity in use — a measure of how fully firms are using their resources — slipped 0.8 of a point, to 75.9 percent in October, the lowest level since November 2011.

Common Sense: ‘Why I Left Goldman Sachs,’ by Greg Smith, Falls Short

Mr. Smith’s letter clearly hit a popular nerve, coming as it did during a devastating financial crisis in which Goldman emerged as the rich, arrogant and unfeeling perpetrator of much of the financial wreckage still afflicting Americans. And it’s hard to quarrel with Mr. Smith’s overriding message: Wall Street should put clients interests’ first or risk oblivion. Indeed, that was Goldman Sachs’s own credo, “Our clients’ interests always come first.”

But stripped of its incendiary conclusions, Mr. Smith’s manifesto was curiously short on facts. Other than the now-infamous reference to muppets — “I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail” — there were no examples of a toxic culture at work, no actual names of morally bankrupt people and no examples of a client getting ripped off. Mr. Smith declined to elaborate after the article was published, heightening suspense and no doubt fueling the literary bidding that reached a reported $1.5 million for a book that would deliver the goods.

That book, “Why I Left Goldman Sachs,” goes on sale on Monday. Despite tight security, copies of the book have been circulating, and I read one. The book not only fails to deliver concrete examples to back up his sweeping conclusions, but he admits changing “names or descriptors” for some (but not all) people and acknowledges that what he does disclose is “from memory.”

He says he has tried “to retain the spirit” of what actually occurred. This makes it nearly impossible to verify much of what he says.

Beyond that, from his perch on the equity trading desk he seems to have had a narrow view of the institution where he worked for nearly 12 years. His disillusionment comes across as heartfelt, but much of it seems to have come less from his own experiences than from news reports about the firm’s behavior in deals he wasn’t involved in.

Mr. Smith’s book might even bolster Goldman’s reputation. After all, if Mr. Smith is the ultimate insider, and this is as bad as it gets — Mr. Smith in a hot tub at the Mandalay Bay Hotel in Las Vegas with a topless woman — then he hasn’t made much of a case.

But Mr. Smith isn’t in much of a position to exonerate Goldman, either. The firm was deeply enmeshed in nearly all aspects of the financial crisis and its causes, including mortgage-backed securities. And after an injection of taxpayer support, it managed to profit handsomely and pay the lavish bonuses that Mr. Smith shared in. But you won’t find that story in “Why I Left.”

Mr. Smith declined to discuss any of this before his scheduled appearance on Sunday on “60 Minutes.” Goldman Sachs responded to some of my questions with copies of parts of their internal investigation and made several employees available.

Potential problems with Mr. Smith’s approach surface almost immediately. The first paragraph of Chapter 1 describes “an intern named Josh” who’s being “grilled” and asked to explain risk arbitrage but “was floundering badly.” Josh, Mr. Smith adds, is the son of a billionaire.

There was no “Josh” in Mr. Smith’s group of interns, and only one son of a billionaire: Teddy Schwarzman, son of Stephen Schwarzman, the chairman and chief executive of the asset management firm Blackstone Group.

“I was never grilled on risk arbitrage, or asked to give a presentation on it,” Mr. Schwarzman said when I contacted him this week. “I realize it was a long time ago, but I would certainly have remembered it if I had floundered.” Nor did anyone else in the class I spoke to recall such an episode.

Federal Deficit for 2012 Fiscal Year Falls to $1.1 Trillion

WASHINGTON — The federal deficit fell to $1.1 trillion in the 2012 fiscal year, down from about $1.3 trillion a year earlier, the Obama administration said on Friday.

That is the smallest deficit since 2008 but represents the fourth year in a row that the deficit has exceeded $1 trillion. Before the recession, which prompted huge federal spending and large tax cuts, the deficit had never exceeded half a trillion dollars.

The gap between government receipts and government spending — about 7 percent of economic output in the 2012 fiscal year, down from 8.7 percent in the 2011 fiscal year — has become a heated election-year political issue.

Republicans have hammered the Obama administration for not doing enough to control deficits and aid growth. “We’ve had four budgets, four trillion-dollar deficits,” Representative Paul D. Ryan of Wisconsin said during the vice-presidential debate on Thursday evening. “A debt crisis is coming. We can’t keep spending and borrowing like this. We can’t keep spending money we don’t have.”

Democrats have argued that the economy needs near-term support as well as long-term deficit reduction and have cautioned that too-severe budget cuts would unravel the social safety net.

“The president has put forward a balanced proposal to further strengthen the economy and reduce the country’s future deficits,” Timothy F. Geithner, the Treasury secretary, said in a statement on Friday. “It is time for Congress to act on these necessary steps that will help create sustainable economic growth for years to come.”

Releasing budget details for the full fiscal year that ran from last October through this September, the Treasury Department and the White House budget office said that the deficit was $238 billion less than it had forecast in the February budget proposal by the White House. Over all, government outlays were $3.5 trillion in the 2012 fiscal year, and receipts totaled about $2.45 trillion.

The shrinking deficit was a result of both higher tax receipts and lower government spending. Government receipts climbed 6.4 percent year-over-year as the economy grew stronger and certain tax breaks expired. Corporate income taxes were a “major contributor” to the rise in overall receipts, the administration report said, climbing to $242 billion, from $181 billion in 2011.

Moreover, outlays dropped $61 billion year-over-year because of falling military spending on Afghanistan and Iraq, tapering stimulus spending and the strengthening economy. “The largest decreases relative to the prior year came from the Department of Defense, unemployment insurance and Medicaid,” the report said.

The report comes as members of Congress struggle with the so-called fiscal cliff — huge tax increases and across-the-board spending cuts set to hit next year that might cut the deficit in half but would also risk throwing the country into a recession.

Jobless Rate Falls to 7.8%, Lowest Since January 2009

While employers added only a modest 114,000 jobs last month, the jobless rate declined to 7.8 percent from 8.1 percent, even though more people entered the labor force.

Adding to the positive news, job gains were revised upward by 40,000 for July (to 181,000) and by 46,000 for August (to 142,000), which had been considered a disappointing month, casting a slightly rosier hue on the summer slowdown.

The private sector, which has been adding jobs since March 2010, grew by 104,000 workers in September. Governments, where cuts have been a drag on the recovery, added 10,000 jobs.

Manufacturing, one of the bright spots that Mr. Obama has showcased throughout the re-election campaign, fell 16,000 jobs after losing  a revised 22,000  in August, and construction jobs grew by 5,000. The number of temporary jobs, usually considered a harbinger of future growth, fell 2,000.

Coming a month before the presidential election, the jobs report offered ammunition for both sides as the candidates vie to convince voters that each is better equipped to steer the economy.

Mr. Obama can point to the 24th straight month of overall job growth after a severe financial crisis and a drop below the stubborn 8 percent jobless rate that has dogged his presidency. Republicans can — and did on Friday — continue to criticize the slow pace of improvement.

Mitt Romney, the Republican presidential challenger, took particular issue with any positive interpretation of the report.

“This is not what a real recovery looks like,” he said in a statement. “We created fewer jobs in September than in August, and fewer jobs in August than in July, and we’ve lost over 600,000 manufacturing jobs since President Obama took office.”

Representative Kevin Brady, a Republican from Texas and vice chairman of the joint economic committee, said the drop in the unemployment rate “was driven primarily by an increase of 582,000 in the number of workers employed involuntarily in part-time jobs. These workers need and want full-time jobs.”

“If not for all the people who have simply dropped out of the labor force,” Mr. Romney said in his statement, “the real unemployment rate would be closer to 11 percent.”

Representative Eric Cantor of Virginia, the majority leader, conceded that numbers were an improvement but added, “it simply isn’t good enough.” A jobless rate of 7.8 percent “should not be cause for celebration.”

Senate Majority Leader Harry Reid, Democrat from Nevada, countered that “with unemployment dropping below 8 percent to the lowest level in four years, our economy is on the right track.”

Consumers and businesses, too, seem to have divergent views of the economic situation. Consumers have shown increasing confidence as stocks rise and home prices stabilize.

Business leaders have been hanging back, though, more focused on global economic slowing and domestic concerns. They say they are uncertain what the election will mean for the business climate and are waiting in part for a resolution of the so-called fiscal cliff, a host of tax increases and budget cuts that will be triggered at the end of the year if Congress fails to act.

Harry Kazazian, the chief executive officer of Exxel Outdoors, a maker of camping equipment in Alabama, said the election, the fiscal cliff and rapidly shifting regulations had put him in a cautious mood.

With sales on the rise, Exxel has restarted a capital investment plan that it suspended three years ago, but is doing so slowly. “We’re moving forward, but we’re doing it in steps rather than being much more aggressive and putting ourselves out there,” Mr. Kazazian said. “I wouldn’t be surprised if things start turning the other way, meaning down.”

But at a Walmart in Atlanta, shoppers were loosening the reins a bit, buying what they described as small indulgences like scented candle oil and seasonal beer.

Linda Avery, 50, a food service manager, said her income had not changed but her daughter had moved out of the house, reducing her food and utility expenses.

John H. Cushman Jr. contributed reporting from Washington.