Economist says US has escaped recession, Shares flat on weaker profit results: Economy Roundup

Some good news for the US economy emerged overnight, with leading Wall Street analyst and economist Abby Joseph Cohen declaring the country’s economy had pulled out of its recession.

The Australian newspaper reports that Cohen, who works as head of Goldman Sachs’ Global Markets Institute, said the US economy will grow by 3% during the second half of this year, with 2% growth during 2010.

“Companies squeezed down their inventories to extraordinarily low levels and to the point where even without a pick-up in demand there was a need to rebuild,” she said in an interview.

“At this point it appears to us the recession ended in June of 2009. It looks to us that the United States is out of recession in the second half of this year.”

She also said the country escaped another fall back into recession due to the “stress tests” imposed on the US banking system by the Obama administration.

Shares flat, Tatts Group profit rises

Back home, the Australian share market has opened flat, with results on Wall Street also flat last night after weaker financial results from several companies.

The benchmark S&P/ASX200 index was down 12 points or 0.27% to 4442.5 at 12.00 AEST. The Australian dollar also opened lower to US82c.

NAB shares rose 0.5% to $27.21, while Commonwealth Bank shares dropped 0.2% to $44.52. ANZ shares climbed 0.9% to $20.15, while Westpac rose 0.9% to $23.86.

Gaming group Tatts has recorded a 7.7% increase in full-year net profit to $277.4 million for the year ending 30 June, with revenue also up by 5.1% to $3.25 billion.

The company said the increase in profit was partly due to many people using the Government’s stimulus payments for gambling funds.

“There is little doubt that the neighbourhood gambling model offered by Tatts is more resilient than many other businesses during a period of falling consumer confidence and rising unemployment,” the company said in a statement.

“The main question is whether the strong performance over the past few years can be maintained.”

The company’s biggest owner of private hospitals, Ramsay Health Care, has recorded a 15.5% increase in net profit and announced a plan to raise $220 million through an institutional placement offer.

“In the short-term, proceeds from the capital raising will be used to reduce drawn debt under the company’s existing revolving debt facilities,” the company said in a statement.

“The capital raising will further strengthen Ramsay’s balance sheet and increase its financial flexibility to continue to pursue growth initiatives.”

Westfield share issue, US stocks flat

Shopping centre group Westfield has declared a $US2 billion share issue in the US to pay back debts, it has said in a statement to the ASX.

The company also said the debt issue will comprise of $US750 million in six-year fixed rate senior guaranteed notes, with $US1.25 billion 10-year fixed rate senior guaranteed notes also included.

“Proceeds of the issue will be used to repay borrowings under the Group’s revolving credit facilities,” the company said in a statement.

Overseas, airline Air New Zealand has recorded a $17.2 million profit for the full year, a 90% decline from last year’s result, with the company saying it had hit to cope with lower passenger numbers.

“This result positions Air New Zealand as one of the top airline performers globally but it falls short of delivering shareholders an appropriate commercial return,” chairman John Palmer said in a statement.

“Although there are some early indicators that the slump in travel demand may be showing signs of having bottomed out, it would be naive to think that there won’t be bumps on the road to economic recovery,” chief executive Rob Fyfe said in a statement.

On Wall Street, stocks remained flat after a few days of solid results, despite good economic data regarding new home sales and goods orders. The Dow Jones Industrial Average gained just 4.23 pints or 0.04% to 9543.52.