Economy

The credit crisis took a heavier toll on banks in the second quarter of the year: The number of troubled banks rose 30%, to 117, the highest in five years, from 90 in the first quarter, the Federal Deposit Insurance Corp. said. The surge in the FDIC's "problem banks" comes as the industry grapples with ballooning bad consumer loans and shrinking profits. Historically, about one in eight banks on the problem list have eventually failed. The FDIC also said that in the latest quarter, banks' profits plunged 87%, to $5 billion, compared with the same quarter a year ago. Overall, troubled banks represent only about 1.4% of 8,451 insured institutions. But the rise in troubled banks is worrisome because additional failures could worsen the economic downturn, analysts say. Ten banks have failed so far in 2008, compared with three in 2007.

Stung by mounting home-loan defaults, U.S. thrifts lost $5.4 billion in the second quarter and set aside a record amount to cover losses from bad mortgages and other loans. Data from the Office of Thrift Supervision issued Wednesday show that federally insured savings and loans posted their second-largest quarterly loss ever in the April-June period, after the $8.8 billion loss in the fourth quarter of last year. The $5.4 billion loss compared with net profit of $3.8 billion in the same period a year ago. The 829 thrifts also set aside a record $14 billion to cover losses from mortgages and other loans.

WASHINGTON (Reuters) — Personal income tumbled unexpectedly in July and spending slowed as the effects of government stimulus wore off and an inflation measure was at a 17-year high, a government report released Friday showed. Personal income fell 0.7% in July, the sharpest decline since a 2.3% plunge in August 2005 after Hurricane Katrina. Inflation-adjusted spending dropped 0.4%, the sharpest slide in four years. Inflation, as measured by the year-over-year rise in the personal consumption expenditures index, rose 4.5%, the steepest since February 1991.

NEW YORK (AP) — Nearly 1 million individuals and businesses filed bankruptcy in the 12 months ended June 30, up 28.9% from the prior 12 months, according to U.S. Court data released Wednesday. Of the 967,831 bankruptcy cases filed since July 1, 2007, non-business filings made up 96.5% of those cases, totaling 934,009. Of them, 592,376 were Chapter 7 filings, which involve liquidation of non-protected assets, like family homes.

WASHINGTON (Reuters) — Orders for durable manufactured goods jumped a surprising 1.3% in July on strong civilian aircraft sales, while a gauge of business investment also rose unexpectedly, a government report showed on Wednesday. Even when volatile transportation orders were stripped out, demand for durables rose 0.7%. Analysts had expected a 0.5% drop in durables orders excluding transportation. Non-defense capital goods orders excluding aircraft, seen as a barometer of business spending, jumped 2.6%, steepest gain since April. Analysts were expecting that category to decline by 0.1%. Strength outside of transportation reflected strong gains in such areas as primary metals, including steel and machinery.

WASHINGTON (AP) — Economic growth rebounded at better-than-expected 3.3% annual rate in the April-June quarter, the government said Thursday. The Commerce Department says the economy shifted to a higher gear, growing at its fastest pace in nearly a year, as foreign buyers snapped up U.S. exports and tax rebates spurred shoppers at home. The revised reading was much better than the government's initial estimate of a 1.9% pace and exceeded economists' expectations for a 2.7% growth rate. The rebound comes after two dismal quarters. The economy shrank in the final three months of 2007 and limped into the first quarter at a feeble 0.9% annual growth rate. The 3.3% growth in the spring was the best performance since the third quarter last year, when the economy was chugging along at a brisk 4.8% pace.