Fed hits pols' fiscal policies
The Federal Reserve cautioned America's political leaders on Wednesday that their policies are hurting the economy. The Fed stood by its aggressive efforts to stimulate the economy and reduce unemployment. But it sent its clearest signal to date that payroll tax increases and sequester spending cuts that kicked in this year are slowing the economy. "Fiscal policy is restraining economic growth," the Fed said in a statement after a two-day policy meeting. The Fed maintained its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent. And it said it will continue to buy $85 billion a month in Treasury and mortgage bonds.
Construction spending declines
Spending on U.S. construction projects fell in March as the biggest drop in government projects in more than a decade overwhelmed strength in home building. Construction spending fell 1.7 percent in March, compared with February, the Commerce Department reported. It was the second decline in the past three months. January activity plunged a record 4 percent. Even with the recent weakness, construction activity was 4.8 percent higher in March than a year ago, at a seasonally adjusted $856.7 billion. For March, private residential construction rose 0.4 percent, while government activity fell 4.1 percent, the biggest drop since March 2002. Economists expect government activity to slow as agencies cope with across-the-board spending cuts that went into effect March 1.
Facebook income, revenue up
Facebook says its net income and revenue grew in the first quarter of the year, helped by an increase in mobile ad revenue. Facebook Inc. said Wednesday its net income was $219 million, or 9 cents a share, in the January-March period. That's up from $205 million, or 9 cents a share, in the same period a year ago when the company was still private. Revenue grew 38 percent to $1.46 billion from $1.06 billion. Analysts expected $1.44 billion. Menlo Park, Calif.-based Facebook says its mobile advertising revenue represented 30 percent of the total at $375 million, up from 23 percent in the fourth quarter. The stock closed at $27.43 but rose a tick in after-hours trading; it went public almost a year ago at $38 a share.
President Barack Obama on Wednesday tapped a veteran Democratic congressman to lead the Federal Housing Finance Agency and a top fundraiser and former lobbyist to head up the Federal Communications Commission. Rep. Melvin Watt (D-N.C.), would oversee federal mortgage lenders Fannie Mae and Freddie Mac. Watt has led efforts to rein in unscrupulous mortgage lenders, Obama said. Tom Wheeler would become the nation's top telecommunications regulator. He is a former head of the Cellular Telecommunications and Internet Association, and the National Cable Television Association. He raised more than $500,000 for Obama's re-election, according to campaign data.
Slow sales for Windows RT
Microsoft is seeing slow sales of a version of Windows designed for thin and light tablets, even as the tablet market as a whole is growing, a research firm reported Wednesday. Researchers at IDC said manufacturers shipped 200,000 tablets running Windows RT, the special version of Windows for iPad-style tablets, in the January to March period. That's down from about 900,000 shipped in the fourth quarter. Microsoft Corp. launched Windows RT in October, along with the Surface tablet. The software runs on a few tablets from other manufacturers as well. Windows RT is designed to run on phone-style chips, like those used in the iPad, rather than PC-style chips, which use more energy and require bigger batteries. Using Windows RT means tablets can be thinner and lighter, but it also means regular Windows programs won't run on Windows RT.