Incomes see largest drop in 20 years

U.S. consumer spending rose in January as Americans spent more on services, with savings providing a cushion after income recorded its biggest drop in 20 years.

Income tumbled 3.6 percent, the largest drop since January 1993. Part of the decline was payback for a 2.6 percent surge in December as businesses, anxious about higher taxes, rushed to pay dividends and bonuses before the new year.

A portion of the drop in January also reflected the tax hikes. The income at the disposal of households after inflation and taxes plunged a 4.0 percent in January after advancing 2.7 percent in December.

The Commerce Department said on Friday consumer spending increased 0.2 percent in January after a revised 0.1 percent rise the prior month. Spending had previously been estimated to have increased 0.2 percent in December.

January's increase was in line with economists' expectations. Spending accounts for about 70 percent of U.S. economic activity and when adjusted for inflation, it gained 0.1 percent after a similar increase in December.

Though spending rose in January, it was supported by a rise in services, probably related to utilities consumption. Spending on goods fell, suggesting some hit from the expiration at the end of 2012 of a 2 percent payroll tax cut. Tax rates for wealthy Americans also increased.

The impact is expected to be larger in February's spending data and possibly extend through the first half of the year as households adjust to smaller paychecks, which are also being strained by rising gasoline prices.

Economists expect consumer spending in the first three months of this year to slow down sharply from the fourth quarter's 2.1 percent annual pace.

With income dropping sharply and spending rising, the saving rate - the percentage of disposable income households are socking away - fell to 2.4 percent, the lowest level since November 2007. The rate had jumped to 6.4 percent in December.

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Latest autopsy reveals no new details in lottery winner's death

The body of poisoned lottery winner, Urooj Khan, is exhumed at Rosehill Cemetery in Chicago on Friday, Jan. 18, 2013. (John J. Kim, Chicago Tribune)

Cook County Chief Medical Examiner Stephen J. Cina said today that the exhumation and autopsy of Urooj Khan’s body revealed nothing new to help Chicago police in the investigation of the million-dollar lottery winner’s cyanide poisoning death last summer.

At a press conference at the medical examiner’s West Side office, Cina said the body was badly decomposed and the autopsy could not confirm how the cyanide entered his body.

Cina said no cyanide was detectable in Khan’s body tissues or in the “small amount” of contents in the stomach because of the advanced decomposition.

"Cyanide has a short half-life and may be lost over the postmortem period unless tissues are adequately preserved," he said. "In this case, due to advance putrefaction of the tissues, no cyanide was detectable in the tissues or small amounts of gastric content recovered following exhumation of the body."

The medical examiner said pathologists could not tell what Khan had last eaten, saying there was only “residue” left in the stomach.

"I can't say whether it (cyanide) was ingested or not," Cina said.

The autopsy did reveal 75 percent blockage in one of Khan’s coronary arteries, but the medical examiner still ruled that Khan died of cyanide toxicity -- with heart disease as a "contributing factor." The manner of death was homicide, he said.

"Since cyanide affects oxygen utilization in the tissues, it follows logically that a natural disease process that already limits blood flow to the heart could render an individual particularly susceptible to death due to this toxin," Cina said.

Cina said he was limited in what he could tell reporters because of the "ongoing police investigation."

When a reporter asked if Khan could have died of a heart attack, Cina said, "As a pathologist you have to look at the totality of the evidence. And I don't see how I can ignore a lethal level of cyanide in the blood."

Authorities hoped to shed light on the mystery after unearthing Khan’s body at a Far North Side cemetery on Jan. 18 and performing an autopsy on the remains that same day.

After the approximately two-hour autopsy, Cina said the body was in an advanced state of decomposition but that doctors were able to gather samples for toxicological testing. The body was reburied three days later at Rosehill Cemetery.

As the Tribune first revealed earlier in January, the medical examiner's office initially ruled that Khan, 46, died July 20 from hardening of the arteries after no signs of trauma were found on the body and a preliminary blood test didn't raise any questions. But the investigation was reopened about a week later after Khan’s brother, ImTiaz, raised concerns that Khan may have been poisoned.

In an interview last month with the Tribune, Imtiaz Khan said he was visiting his brother’s grave site about a week after his death with the medical examiner’s office returned his call.

"I said: 'No, my brother cannot die like this. He was so healthy. I have suspicions about this. It cannot be natural. Please go and look into more details about it,' " Khan said. "I'm looking at the grave. I said: 'He should not be here. Absolutely not. He cannot die like that.' "

Chicago police were notified in September after tests showed cyanide in Khan’s blood. By late November, more comprehensive tests showed lethal levels of the toxic chemical, leading the medical examiner's office to declare his death a homicide.

Khan had won the scratch-off lottery prize a few weeks before his death, but he didn't survive long enough to collect the winnings -- a lump-sum payment of about $425,000 after taxes.

At the time of the autopsy in January, Cina said Khan had been buried in a wood box with a plastic foam covering wrapped in a shroud. The box sat in a concrete vault.

Following Muslim tradition, Khan’s body was not embalmed, contributing to its decomposition, Cina said. Still, the medical examiner's team was able to take samples from major organs during the autopsy for toxicological analysis, he said.

"Generally, embalming preserves tissues better. It makes it easier to see things," Cina said. "However ... additives in the embalming fluid can confuse some of the toxicological analysis."

The team also recovered contents in Khan’s stomach, according to Cina. Hair and fingernail samples also were gathered for testing, he said.

Authorities also collected a sample of the dirt surrounding the vault, because tiny organisms living in the soil can produce cyanide at low levels. Cina wanted to test it in case questions arose about whether the dirt could influence the laboratory findings on Khan’s body.

Cina's team did not smell cyanide during the autopsy, but the medical examiner said that it likely wouldn't be possible to detect the bitter-almond scent of the chemical because of the decomposition.

In court papers, Cina said it was necessary to perform a full autopsy to "further confirm the results of the blood analysis as well as to rule out any other natural causes that might have contributed to or caused Mr. Khan’s death."

Khan’s widow, Shabana Ansari, who has hired a criminal defense lawyer, told the Tribune in January that she had been questioned for more than four hours by detectives and answered all their questions. She said the detectives had asked her about the ingredients she used to prepare the final meal that her husband ate.

The Tribune also has reported that Ansari's father, Fareedun, who also lives in the family home, had owed more than $120,000 in back taxes, leading the Internal Revenue Service to place liens on Khan’s West Rogers Park residence.

According to court records obtained by the Tribune, Imtiaz Khan has squabbled with Shabana Ansari over the lottery winnings in probate court. The brother raised concern that because Khan left no will, Khan’s daughter from a previous marriage, Jasmeen, 17, would not get "her fair share" of her father's estate. The couple did not have any children together.

An attorney for Ansari in the probate case said the money was all accounted for and the estate was in the process of being divided up by the court. Under state law, the estate typically would be split evenly between the spouse and Khan’s only child, he said.

Fareedun and Shabana Ansari have denied involvement in Khan’s death and neither has been accused of a crime.

But last month, Ansari’s lawyer contended that weeks before his death, Khan had inked a deal with a business partner to ensure that his share of several dry cleaning stores went to his wife in the event of his death.

The business contract means that Ansari owns half the dry cleaning operation and its real estate, valued at more than $1 million, instead of those assets being divided among heirs in probate court, according to Ansari's lawyer, Al-Haroon Husain. The lawyer acknowledged he expects the dispute over the assets to be fought in court.

"It's a bit unusual," Husain said of the contract. "I just think he wanted to make sure his wife had a business and had attachment to the commercial property if something happened to him." Although a motive has not been determined, police have not ruled out that Khan was killed because of his lottery win, a law enforcement source has told the Tribune. 

In addition, a real estate agreement Khan signed with his wife in 2007 entitles her to sole ownership of their West Rogers Park home, which is valued at almost half a million dollars, Husain said.

Kahn’s sister, Meraj Khan, told the Tribune her suspicions of Ansari's motives intensified after learning of the business agreement.

"Things are getting more clear about why my brother is gone," the sister said. "Out of nowhere she's the beneficiary for ... the business?"

jmeisner@tribune.com

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German lawmakers back Internet copyright, Google critical

* Critics say bill too vague to help publishers

* Search engine Google says will hurt consumers

BERLIN (Reuters) - German lawmakers approved a bill on Friday that aims to protect publishers' copyright on the Internet but critics branded it too weak for failing to make search engines such as Google pay for displaying news snippets.

The bill, which follows years of debate, comes as the newspaper industry in Germany, as elsewhere, struggles to find new sources of revenue as readers and advertisers move online in droves.

Chancellor Angela Merkel's centre-right coalition, which faces an election in September, watered down its original plans amid pressure from Internet lobbyists, lawyers and others who argued that it undermined freedom of information.

Google launched an ad campaign in German newspapers and set up a web information site called "Defend your web" to lobby against the proposals, saying they would mean less information for consumers and higher costs for companies.

The "ancillary copyright" bill now makes clear that search engines can publish "individual words or small snippets of text such as headlines" without incurring any costs.

They will have to pay for use of longer pieces of content, though opposition parties said the wording of the bill was vague and could lead to courts having to rule on individual cases.

The opposition parties could still block the bill in the Bundesrat, the upper house of parliament, where the government has no majority.

"It is not at all clear who is now meant to be protected from whom and why there is this law," said the opposition Greens on their website on Friday, saying the bill served neither cash-strapped publishers nor the free flow of information.

Google echoed such criticism.

"The law is neither necessary nor sensible. It hampers innovation and hurts the economy and Internet users in Germany," said Kay Oberbeck, communications director at Google.

But the association of German newspaper publishers welcomed the bill as "an important element in the creation of a fair legal space in the digital world".

They have argued that search engines raise the vast majority of their revenues from online advertising and that a substantial part of these come directly or indirectly from the free access to professional news or entertainment content produced by media.

The German draft bill states explicitly that it is not intended to protect newspapers from the effects of ongoing structural changes in the market.

(Reporting by Gareth Jones and Matthias Sobolewski; Editing by Michael Roddy)

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WHO: Slight cancer risk after Japan nuke accident

LONDON (AP) — Two years after Japan's nuclear plant disaster, an international team of experts said Thursday that residents of areas hit by the highest doses of radiation face an increased cancer risk so small it probably won't be detectable.

In fact, experts calculated that increase at about 1 extra percentage point added to a Japanese infant's lifetime cancer risk.

"The additional risk is quite small and will probably be hidden by the noise of other (cancer) risks like people's lifestyle choices and statistical fluctuations," said Richard Wakeford of the University of Manchester, one of the authors of the report. "It's more important not to start smoking than having been in Fukushima."

The report was issued by the World Health Organization, which asked scientists to study the health effects of the disaster in Fukushima, a rural farming region.

On March 11, 2011, an earthquake and tsunami knocked out the Fukushima plant's power and cooling systems, causing meltdowns in three reactors and spewing radiation into the surrounding air, soil and water. The most exposed populations were directly under the plumes of radiation in the most affected communities in Fukushima, which is about 150 miles (240 kilometers) north of Tokyo.

In the report, the highest increases in risk are for people exposed as babies to radiation in the most heavily affected areas. Normally in Japan, the lifetime risk of developing cancer of an organ is about 41 percent for men and 29 percent for women. The new report said that for infants in the most heavily exposed areas, the radiation from Fukushima would add about 1 percentage point to those numbers.

Experts had been particularly worried about a spike in thyroid cancer, since radioactive iodine released in nuclear accidents is absorbed by the thyroid, especially in children. After the Chernobyl disaster, about 6,000 children exposed to radiation later developed thyroid cancer because many drank contaminated milk after the accident.

In Japan, dairy radiation levels were closely monitored, but children are not big milk drinkers there.

The WHO report estimated that women exposed as infants to the most radiation after the Fukushima accident would have a 70 percent higher chance of getting thyroid cancer in their lifetimes. But thyroid cancer is extremely rare and one of the most treatable cancers when caught early. A woman's normal lifetime risk of developing it is about 0.75 percent. That number would rise by 0.5 under the calculated increase for women who got the highest radiation doses as infants.

Wakeford said the increase may be so small it will probably not be observable.

For people beyond the most directly affected areas of Fukushima, Wakeford said the projected cancer risk from the radiation dropped dramatically. "The risks to everyone else were just infinitesimal."

David Brenner of Columbia University in New York, an expert on radiation-induced cancers, said that although the risk to individuals is tiny outside the most contaminated areas, some cancers might still result, at least in theory. But they'd be too rare to be detectable in overall cancer rates, he said.

Brenner said the numerical risk estimates in the WHO report were not surprising. He also said they should be considered imprecise because of the difficulty in determining risk from low doses of radiation. He was not connected with the WHO report.

Some experts said it was surprising that any increase in cancer was even predicted.

"On the basis of the radiation doses people have received, there is no reason to think there would be an increase in cancer in the next 50 years," said Wade Allison, an emeritus professor of physics at Oxford University, who also had no role in developing the new report. "The very small increase in cancers means that it's even less than the risk of crossing the road," he said.

WHO acknowledged in its report that it relied on some assumptions that may have resulted in an overestimate of the radiation dose in the general population.

Gerry Thomas, a professor of molecular pathology at Imperial College London, accused the United Nations health agency of hyping the cancer risk.

"It's understandable that WHO wants to err on the side of caution, but telling the Japanese about a barely significant personal risk may not be helpful," she said.

Thomas said the WHO report used inflated estimates of radiation doses and didn't properly take into account Japan's quick evacuation of people from Fukushima.

"This will fuel fears in Japan that could be more dangerous than the physical effects of radiation," she said, noting that people living under stress have higher rates of heart problems, suicide and mental illness.

In Japan, Norio Kanno, the chief of Iitate village, in one of the regions hardest hit by the disaster, harshly criticized the WHO report on Japanese public television channel NHK, describing it as "totally hypothetical."

Many people who remain in Fukushima still fear long-term health risks from the radiation, and some refuse to let their children play outside or eat locally grown food.

Some restrictions have been lifted on a 12-mile (20-kilometer) zone around the nuclear plant. But large sections of land in the area remain off-limits. Many residents aren't expected to be able to return to their homes for years.

Kanno accused the report's authors of exaggerating the cancer risk and stoking fear among residents.

"I'm enraged," he said.

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Mari Yamaguchi in Tokyo and AP Science Writer Malcolm Ritter in New York contributed to this report.

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Online:

WHO report: http://bit.ly/YDCXcb

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Incomes see largest drop in 20 years

U.S. consumer spending rose in January as Americans spent more on services, with savings providing a cushion after income recorded its biggest drop in 20 years.

Income tumbled 3.6 percent, the largest drop since January 1993. Part of the decline was payback for a 2.6 percent surge in December as businesses, anxious about higher taxes, rushed to pay dividends and bonuses before the new year.

A portion of the drop in January also reflected the tax hikes. The income at the disposal of households after inflation and taxes plunged a 4.0 percent in January after advancing 2.7 percent in December.

The Commerce Department said on Friday consumer spending increased 0.2 percent in January after a revised 0.1 percent rise the prior month. Spending had previously been estimated to have increased 0.2 percent in December.

January's increase was in line with economists' expectations. Spending accounts for about 70 percent of U.S. economic activity and when adjusted for inflation, it gained 0.1 percent after a similar increase in December.

Though spending rose in January, it was supported by a rise in services, probably related to utilities consumption. Spending on goods fell, suggesting some hit from the expiration at the end of 2012 of a 2 percent payroll tax cut. Tax rates for wealthy Americans also increased.

The impact is expected to be larger in February's spending data and possibly extend through the first half of the year as households adjust to smaller paychecks, which are also being strained by rising gasoline prices.

Economists expect consumer spending in the first three months of this year to slow down sharply from the fourth quarter's 2.1 percent annual pace.

With income dropping sharply and spending rising, the saving rate - the percentage of disposable income households are socking away - fell to 2.4 percent, the lowest level since November 2007. The rate had jumped to 6.4 percent in December.

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Pope leaves Vatican before abdication

VATICAN CITY (Reuters) - Pope Benedict left the Vatican on Thursday after pledging unconditional obedience to whoever succeeds him to guide the Roman Catholic Church at one of the most crisis-ridden periods in its 2,000-year history.

The first pope in six centuries to step down, Benedict flew off in a white Italian air force helicopter for the papal summer villa south of the capital where he took up temporary residence.

Bells rang out from St Peter's Basilica and churches all over Rome as the helicopter circled Vatican City and flew over the Colosseum and other landmarks to give the pontiff one last view of the city where he is also bishop.

"As you know, today is different to previous ones," he told an emotional, cheering crowd in the small town of Castel Gandolfo in his last public remarks as pope.

"I will only be the supreme pontiff of the Catholic Church until 8 p.m and then no longer. I will simply be a pilgrim who is starting the last phase of his pilgrimage on this earth."

He turned and went inside the villa, never to be seen again as pope.

In an emotional farewell to cardinals on Thursday morning in the Vatican's frescoed Sala Clementina, Benedict appeared to send a strong message to the top echelons of the Church as well as the faithful to remain united behind his successor, whoever he is.

"I will continue to be close to you in prayer, especially in the next few days, so that you are fully accepting of the action of the Holy Spirit in the election of the new pope," he said. "May the Lord show you what he wants. Among you there is the future pope, to whom I today declare my unconditional reverence and obedience."

The pledge, made ahead of the closed-doors conclave where cardinals will elect his successor, was significant because for the first time in history, there will be a reigning pope and a former pope living side by side in the Vatican.

Some Church scholars worry that if the next pope undoes some of Benedict's policies while his predecessor is still alive, Benedict could act as a lightning rod for conservatives and polarize the 1.2 billion-member Church.

Before boarding the helicopter, Pope Benedict said goodbye to monsignors, nuns, Vatican staff and Swiss guards in the San Damaso courtyard of the Holy See's apostolic palace. Many of his staff had tears in their eyes as the helicopter left.

As the helicopter took off, he sent his last message on Twitter: "Thank you for your love and support. May you always experience the joy that comes from putting Christ at the centre of your lives".

Benedict will spend the first few months of his retirement in the papal summer residence, Castel Gandolfo, a complex of villas boasting lush gardens, a farm and stunning views over Lake Albano in the volcanic crater below the town.

At 8 p.m. (1900 GMT/2 p.m. ET) the papacy will be officially vacant and two Swiss Guards that ceremonially watch over the summer villa will march away and not return until the new pope takes possession of the hilltop residence.

Benedict will stay until April when renovations are completed on a convent in the Vatican that will be his new home.

PAPAL PROBLEMS

With the election of the next pope taking place in the wake of sexual abuse scandals, leaks of his private papers by his butler, falling membership and demands for a greater role for women, many in the Church believe it would benefit from a fresh face from a non-European country.

A number of cardinals from the developing world, including Ghanaian Peter Turkson and Antonio Tagle of the Philippines are two names often mentioned as leading candidates from the developing world who listen more.

"At the past two conclaves, the cardinals elected the smartest man in the room. Now, it may be time to choose a man who will listen to all the other smart people in the Church," said Father Tom Resse, a historian and senior fellow at the Woodstock Theological Center at Georgetown University.

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Samsung Electronics says loses a Japan patent lawsuit to Apple

MADRID, Feb 27 (Reuters) - Lionel Messi has rarely been accused of failing to deliver in big games, having scored in two European Cup finals, but after subdued performances against AC Milan and Real Madrid, questions are being asked. The four-times World Player of the Year and leading scorer in one of the greatest club teams of all time, was a shadow of his usual self at the San Siro in a Champions League last-16 first leg last week, when Barcelona slumped to a 2-0 defeat. ...

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Medicare paid $5.1B for poor nursing home care

SAN FRANCISCO (AP) — Medicare paid billions in taxpayer dollars to nursing homes nationwide that were not meeting basic requirements to look after their residents, government investigators have found.

The report, released Thursday by the Department of Health and Human Services' inspector general, said Medicare paid about $5.1 billion for patients to stay in skilled nursing facilities that failed to meet federal quality of care rules in 2009, in some cases resulting in dangerous and neglectful conditions.

One out of every three times patients wound up in nursing homes that year, they landed in facilities that failed to follow basic care requirements laid out by the federal agency that administers Medicare, investigators estimated.

By law, nursing homes need to write up care plans specially tailored for each resident, so doctors, nurses, therapists and all other caregivers are on the same page about how to help residents reach the highest possible levels of physical, mental and psychological well-being.

Not only are residents often going without the crucial help they need, but the government could be spending taxpayer money on facilities that could endanger people's health, the report concluded. The findings come as concerns about health care quality and cost are garnering heightened attention as the Obama administration implements the nation's sweeping health care overhaul.

"These findings raise concerns about what Medicare is paying for," the report said.

Investigators estimate that in one out of five stays, patients' health problems weren't addressed in the care plans, falling far short of government directives. For example, one home made no plans to monitor a patient's use of two anti-psychotic drugs and one depression medication, even though the drugs could have serious side effects.

In other cases, residents got therapy they didn't need, which the report said was in the nursing homes' financial interest because they would be reimbursed at a higher rate by Medicare.

In one example, a patient kept getting physical and occupational therapy even though the care plan said all the health goals had been met, the report said.

The Office of Inspector General's report was based on medical records from 190 patient visits to nursing homes in 42 states that lasted at least three weeks, which investigators said gave them a statistically valid sample of Medicare beneficiaries' experiences in skilled nursing facilities.

That sample represents about 1.1 million patient visits to nursing homes nationwide in 2009, the most recent year for which data was available, according to the review.

Overall, the review raises questions about whether the system is allowing homes to get paid for poor quality services that may be harming residents, investigators said, and recommended that the Centers for Medicare & Medicaid Services tie payments to homes' abilities to meet basic care requirements. The report also recommended that the agency strengthen its regulations and ramp up its oversight. The review did not name individual homes, nor did it estimate the number of patients who had been mistreated, but instead looked at the overall number of stays in which problems arose.

In response, the agency agreed that it should consider tying Medicare reimbursements to homes' provision of good care. CMS also said in written comments that it is reviewing its own regulations to improve enforcement at the homes.

"Medicare has made significant changes to the way we pay providers thanks to the health care law, to reward better quality care," Medicare spokesman Brian Cook said in a statement to AP. "We are taking steps to make sure these facilities have the resources to improve the quality of their care, and make sure Medicare is paying for the quality of care that beneficiaries are entitled to."

CMS hires state-level agencies to survey the homes and make sure they are complying with federal law, and can require correction plans, deny payment or end a contract with a home if major deficiencies come to light. The agency also said it would follow up on potential enforcement at the homes featured in the report.

Greg Crist, a Washington-based spokeswoman for the American Health Care Association, which represents the largest share of skilled nursing facilities nationwide, said overall nursing home operators are well regulated and follow federal guidelines but added that he could not fully comment on the report's conclusions without having had the chance to read it.

"Our members begin every treatment with the individual's personal health needs at the forefront. This is a hands-on process, involving doctors and even family members in an effort to enhance the health outcome of the patient," Crist said.

Virginia Fichera, who has relatives in two nursing homes in New York, said she would welcome a greater push for accountability at skilled nursing facilities.

"Once you're in a nursing home, if things don't go right, you're really a prisoner," said Fichera, a retired professor in Sterling, NY. "As a concerned relative, you just want to know the care is good, and if there are problems, why they are happening and when they'll be fixed."

Once residents are ready to go back home or transfer to another facility, federal law also requires that the homes write special plans to make sure patients are safely discharged.

Investigators found the homes didn't always do what was needed to ensure a smooth transition.

In nearly one-third of cases, facilities also did not provide enough information when the patient moved to another setting, the report found.

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On the Web:

The OIG report: http://1.usa.gov/VaztQm

The Medicare nursing home database: http://www.medicare.gov/NursingHomeCompare/search.aspx?bhcp=1&AspxAutoDetectCookieSupport=1

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Follow Garance Burke on Twitter at —http://twitter.com/garanceburke.

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Economic expansion weakest since 2011

The U.S. economy barely grew in the fourth quarter although a slightly better performance in exports and fewer imports led the government to scratch an earlier estimate that showed an economic contraction.

Gross domestic product expanded at a 0.1 percent annual rate, the Commerce Department said on Thursday, missing the 0.5 percent gain forecast by analysts in a Reuters poll.

The growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.

However, much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter.

Consumer spending was more robust by comparison, although it only expanded at a 2.1 percent annual rate.

Because household spending powers about 70 percent of national output, this still-lackluster pace of growth suggests underlying momentum in the economy was quite modest as it entered the first quarter, when significant fiscal tightening began.

Initially, the government had estimated the economy shrank at a 0.1 percent annual rate in the last three months of 2012. That had shocked economists.

Thursday's report showed the reasons for the decline were mostly as initially estimated. Inventories subtracted 1.55 percentage points from the GDP growth rate during the period, a little more of a drag than initially estimated. Defense spending plunged 22 percent, shaving 1.28 points off growth as in the previous estimate.

There were some relatively bright spots, however. Imports fell 4.5 percent during the period, which added to the overall growth rate because it was a larger drop than in the third quarter. Buying goods from foreigners bleeds money from the economy, subtracting from economic growth.

Also helping reverse the initial view of an economic contraction, exports did not fall as much during the period as the government had thought when it released its advance GDP estimate in January. Exports have been hampered by a recession in Europe, a cooling Chinese economy and storm-related port disruptions.

Excluding the volatile inventories component, GDP rose at a revised 1.7 percent rate, in line with expectations. These final sales of goods and services had been previously estimated to have increased at a 1.1 percent pace.

Business spending was revised to show more growth during the period than initially thought, adding about a percentage point to the growth rate.

Growth in home building was revised slightly higher to show a 17.5 percent annual rate. Residential construction is one of the brighter spots in the economy and is benefiting from the Federal Reserve's ultra easy monetary policy stance, which has driven mortgage rates to record lows. (Reporting by Jason Lange; Editing by Andrea Ricci)
 

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Obama to meet with leaders over $85B in sequestration cuts

Speaker of the House John Boehner tells Scott Pelley in a "CBS Evening News" interview that a budget deal is now out of his hands.

Tribune staff and wire report

12:04 p.m. CST, February 27, 2013

WASHINGTON -- President Barack Obama will meet with top congressional leaders on Friday to discuss the deep, automatic government spending cuts slated to go into effect that day, congressional aides said.

Known as the sequester or sequestration, the cuts amount indiscriminate across-the-board reductions in federal spending totalling $85 billion. Some 750,000 jobs could be lost, and many government services disrupted.

Talks to avert the cuts have been all but non-existent between leaders and the White House. Mostly lawmakers are now focused on ways to rearrange the way the cuts will fall across defense and domestic accounts.

Obama is set to meet with Republican Speaker of the House of Representatives John Boehner, Senate Republican Leader Mitch McConnell, Democratic Senate Majority leader Harry Reid and Nancy Pelosi, the House Democratic leader.

"The meeting Friday is an opportunity for us to visit with the president about how we can all keep our commitment to reduce Washington spending," McConnell said in a statement.

"We can either secure those reductions more intelligently, or we can do it the president's way with across-the board cuts. But one thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," he said.

Republicans on Capitol Hill immediately questioned Obama's intent.

"If the president is serious about stopping the sequester, why did he schedule a meeting on Tuesday for Friday when the sequester hits at midnight on Thursday?” asked a Republican congressional aide who was not authorized to talk about the private meeting. "Either someone needs to buy the White House a calendar, or this is just a belated farce.  They ought to at least pretend to try."

Transportation secretary Ray LaHood told White House reporters last week that proposed cuts to eht U.S. Federal Aviation Administration would lead to delayed flights, shuttered control towers, and irate travelers.

Reuters and Lisa Mascaro, the Los Angeles Times

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