Top 10 business stories of 2012: Economy, election top list
BY Associated Press
Sunday, December 30, 2012
12/30/12 at 5:46 AM
Original Print Headline: Economy is biggest story
Associated Press business editors chose the top stories of the year:
1. The global economy: Worldwide growth was slack again in 2012. The global economy grew just 3.3 percent, down from 3.8 percent in 2011 and 5.1 percent in 2010, the International Monetary Fund estimates. The U.S. economy, the world's largest, failed to gain traction. Unemployment remained a high 7.7 percent.
Europe fared worse. The euro alliance sank into recession. Europeans, in turn, held back China, the world's No. 2 economy, by cutting back on Chinese goods. China's economy grew at a 7.4 percent annual rate in the July-September quarter. Though a scorching pace for developed countries, that marked a 3 1/2-year low for China.
2. U.S. presidential election: Obama vaulted to a re-election victory over Mitt Romney, who had staked his bid on the weakest U.S. economic rebound since the Great Depression and had pledged to slash taxes. Unemployment under Obama topped 8 percent for 43 straight months.
Yet he won despite the highest unemployment rate of any president seeking re-election since World War II.
3. Obama health-care plan upheld: The Supreme Court caught many by surprise when it backed Obama administration's health-care reform in a 5-4 vote. The law requires Americans to buy insurance or pay a tax, while subsidizing the needy.
4. The fiscal cliff: A dreaded package of tax increases and deep spending cuts to domestic and defense programs loomed over the economy in the year's final months. Negotiators struggled to forge a budget deal to avert those measures. If they fail, the tax increases and spending cuts would kick in Jan. 1. Economists warned that if the fiscal cliff measures remained in place for much of 2013, they would cause a recession.
5. Facebook's IPO: Years of anticipation led to Facebook's initial public offering of stock - the hottest Internet IPO since Google's in 2004. On the eve of its first trading day, Facebook's market value was $104 billion - more than Amazon.com's or McDonald's at the time. Yet the IPO bombed. Traders lost confidence fast. Within three months, Facebook's stock had shed more than half its IPO value.
6. Housing recovery: After a six-year slump that sent more than 4 million homes into foreclosure and shrank home prices about one-third nationwide, the U.S. housing market began to recover in mid-year. Modest job gains and record-low mortgage rates fueled demand. And the supply of available homes sank. By June, prices began rising. And builders broke ground on the most homes in four years. Housing boosted economic growth this year for the first time since 2005.
7. The return of big oil: Domestic crude oil production achieved its biggest one-year gain since 1951, driven by output in North Dakota and Texas. The United States is on pace to pass Saudi Arabia as the world's top oil producer within two years. Credit goes to drilling improvements, like those that have fed a boom in domestic natural-gas production - horizontal drilling combined with hydraulic fracturing, or fracking. The new production helped cut natural gas prices to their lowest levels in more than a decade. Higher oil production helped reduce oil imports to 1992 levels and hand record profits to U.S. refiners. Gasoline prices declined in the last three months of the year. But for all of 2012, the average gallon was a record $3.63.
8. Banks behaving badly: JPMorgan Chase lost $6 billion in a complex series of trades. Morgan Stanley was accused of botching Facebook's IPO. An ex-banker trashed Goldman Sachs for putting profits ahead of customers and for mocking clients as "muppets." Barclays and UBS were fined for their roles in manipulating a key global interest rate. And HSBC agreed to pay $1.9 billion to settle charges that it enabled money laundering by Mexican drug traffickers.
9. Mother Nature: There wasn't enough rain in much of the nation. Then, suddenly there was much too much. The nation suffered its worst drought since the 1950s, covering 80 percent of U.S. farmland. Grain and food prices soared. Then a storm so destructive it was dubbed a "superstorm" walloped the Northeast. Sandy blasted coastal New Jersey and New York and put 8.5 million customers in 21 states in the dark. Sandy will likely end up as the second-costliest U.S. storm ever after Hurricane Katrina.
10. Mobile-gadget wars: Competition in mobile technology intensified. Apple maintained its worldwide dominance. But the use of Google's Android software on competing smartphones and tablets spread faster than Apple's market share. Forty-four percent of U.S. adults own smartphones, up from about 35 percent a year ago. Tablet ownership doubled in 2012. Taking on Apple's iPad, Microsoft unleashed its Surface tablet and began selling Windows 8, a tablet-friendly operating system. Amazon and Barnes & Noble rushed out high-definition-screen tablets. Each priced its premium model less than the entry-level iPad. Apple struck back with the iPad Mini. Struggling to compete, once-formidable Nokia and BlackBerry-maker Research In Motion floundered.
President Barack Obama campaigns for re-election in the heavy rain in July in Glen Allen, Va. Obama won a second term when he received 51 percent of the popular vote in his race against Republican challenger Mitt Romney. One of Obama's biggest immediate challenges is the looming fiscal cliff — a package of tax increases and deep spending cuts. J. SCOTT APPLEWHITE / Associated Press file
Facebook creator Mark Zuckerberg takes questions from members of the media at Harvard University in Cambridge, Mass., in May. Years of anticipation led to Facebook's initial public offering of stock. STEVEN SENNE / Associated Press file