The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 59.0°F | Partly Cloudy

News Briefs

Wealth of U.S. Families Up Sharply


Buoyed by the soaring stock market, the wealth of American families has risen sharply since 1995, outpacing actual income growth and pushing the “typical” family well ahead of where it was in 1989 at the end of the last economic expansion, according to a study released Tuesday by the Federal Reserve.

Overall, the typical family’s net worth jumped 17.6 percent from 1995 to 1998, the study found. The market’s continued growth during 1999, along with a more modest rise in home values, likely means that the typical family is even better off now.

The increase was spread across a broad range of income and ethnic groups, and Fed analysts said some data suggest “that improvements in financial circumstances were shared by many people who did not own stocks.”

The net worth of the typical family -- the value of real estate, stocks, bonds and other assets minus outstanding debts -- totaled $71,600 in 1998, up from $60,900 in 1995 and $59,700 in 1989, the study found. By typical, Fed experts said they meant the family at the median -- the level at which half of all families have larger net worths and half have smaller ones.

The average net worth, pulled upward by the assets of the very wealthy, was $282,500 in 1998, up from $224,800 in 1995.

The findings from the Fed’s triennial Survey of Consumer Finances suggest that the “wealth effect” -- people boosting spending faster than their incomes because a rise in asset values makes them feel better off -- is a significant factor in the economy.

Arco, BP Amoco Seek to Work Out Merger Deal With U.S. Regulators


With the merger between BP Amoco and his company under increasing threat, Atlantic Richfield Co. Chief Executive Mike Bowlin said Tuesday the two oil giants remain willing to haggle with the Federal Trade Commission to come up with an acceptable deal.

But anti-trust experts contend that BP Amoco has bungled the sensitive and highly political process of getting the necessary government approvals for the $27 billion combination.

Legal sources in Washington said that unless the companies come forward with a new offer to divest even more of their combined production capacity of Alaska North Slope crude oil than they already have promised, the FTC will indeed bring suit against the merger, which was proposed last April 1. A federal lawsuit would delay the merger at the very least -- and could sink it.

BP Amoco has negotiated approval from Alaska Gov. Tony Knowles and California Gov. Gray Davis, both in exchange for concession in those states. But California Attorney General Bill Lockyer still has reservations about the deal, and Sens. Barbara Boxer, D-Calif., and Ron Wyden, D-Ore., have complained to the FTC because they believe the merger would increase gasoline prices in their states.

BP Amoco’s latest aggressive maneuver -- declaring that it will close the merger in early February unless the FTC sues to block it -- carries risk all around but is especially treacherous for Arco, which has spent nearly a year in merger limbo.

The FTC has an unbroken winning streak when it comes to challenging deals in court.