NEW YORK — Cheap goods from China weren't the only things that flowed into the United States from overseas this past year — so did many of the biggest stories that dominated headlines on business news pages.
2004 marked a departure from recent years, when many of the biggest business stories were of home-grown origin, such as the collapse of Enron Corp., the bursting of the Internet bubble and scandals that wracked the mutual fund industry.
This year, the business world was acutely affected by what was happening overseas. Oil prices jumped to $55 a barrel, in part because of soaring demand from China and fears of supply disruption in Iraq, Russia and elsewhere. China's own economy grew, as did its global role. The dollar tumbled against other currencies, jobs moved offshore and a foul-up in Britain led to a shortage of flu vaccine.
Editors of U.S. newspapers and broadcast outlets voted those and other stories as the top business headlines of 2004, in a survey conducted by The Associated Press.
To be sure, there was plenty going on at home, too. The Federal Reserve, confident that the economy was back on track, raised short-term interest rates five times. Pharmaceutical giant Merck & Co. suffered a huge black eye as it recalled its painkiller Vioxx because of safety concerns. Martha Stewart's conviction and prison term for lying to federal investigators also made the list.
Here, according to business editors polled by the AP, were the top business stories of 2004:
1. OIL PRICES. Even for those not old enough to remember gasoline lines from the oil shocks of the '70s, the sharp spike in oil prices this year was enough to get anyone worried. The climbing price of crude oil futures came to have such a rattling effect on the stock market that CNBC started including a box on screen with the current price per barrel along with other market indicators like the Dow Jones industrial average and the Standard & Poor's 500 index. Oil prices have since eased to about $44 a barrel, but oil is still in the news as questions remain about how low the temperature might fall this winter, and whether that might tax heating oil supplies.
2. INTEREST RATES. Confident that the economy had found its footing again, the Federal Reserve began in June a series of five quarter-point increases that boosted a key benchmark rate, on overnight loans between banks, to 2 1/4 percent by year's end from a historic low of 1 percent. The Fed also has indicated more are on the way and that its monetary policy remains "accommodative" — Fed-speak for encouraging growth. So far the indicators for inflation have remained benign, but the Fed isn't taking any chances. The trick is to raise borrowing costs enough to keep inflation at bay without choking off growth.
3. VIOXX PULLED. Merck withdrew its huge-selling painkiller from the market in September after its own study showed long-term use of the drug could increase the risk of heart attacks and strokes. The story was a blow to Merck in several ways: $2.5 billion in annual revenues were wiped out; investors pounded the company's stock; and the legal bills could be as high as $18 billion, according to a Merrill Lynch analyst. As the results of the AP poll were being collected, Pfizer Inc. halted advertising of Celebrex, a drug that's in the same class as Vioxx, after one study found higher risk of heart attacks in patients taking large doses of the drug. So far, Pfizer is sticking by Celebrex, noting that other studies found it to be safe.
4. MARTHA, MARTHA, MARTHA. Did she do it? Does she deserve to go to jail? Even now, the conviction and incarceration of Martha Stewart for lying about a stock sale continue to be a focus of attention, and controversy. Stewart, who founded a media empire and once served on the New York Stock Exchange's board of directors, is serving five months at a minimum-security federal women's prison in West Virginia. She recently complained about the "bad food" in prison in a note posted on her personal Web site, and her company is already making plans to get her back on the air. Her future collaborator? Reality TV guru Mark Burnett, producer of "Survivor."
5. CHINA. Was Napoleon right? The French leader once said: "When China wakes, it will shake the world." While most countries are still worried about not enough economic growth, in China, they're worried about too much. Currently zooming along at an annual pace of 9 percent, the Chinese economy might run off the rails if growth isn't brought down to a more manageable rate, Beijing officials fear. So they're putting on the brakes by cutting back public spending and bank lending, and raising interest rates.
6. KMART BUYS SEARS. Financier Edward Lampert only became chairman of the discounter Kmart Holding Corp. last year, as it was emerging from bankruptcy. But he managed to send the company's shares soaring after he started selling off unprofitable stores and banking the real estate gains. For his next trick, he orchestrated a stunning $11 billion deal to bag Sears, Roebuck and Co., one of the most storied names in American business. No doubt, competition in retail is becoming more ferocious by the day thanks to smart, tough players like Wal-Mart Stores Inc. But investors are keeping an eye on Lampert to see what other tricks this 42-year-old Connecticut hedge fund manager has in store.
7. CRISIS IN THE AIR. What's wrong with U.S. airlines? Plenty. Fuel costs are soaring, major carriers are seeking employee pay and benefit cuts, and most of the industry is losing money. It's no wonder that three U.S. carriers — UAL Corp.'s United Airlines, US Airways Group Inc. and ATA Holdings Corp. — are in bankruptcy, while yet another, Delta Air Lines Inc., came close to filing. Just a few very efficient carriers such as Southwest Airlines Co. and JetBlue Airways Corp. are making money, and others are looking to them for clues about how to get their own costs down.
8. FALLING DOLLAR. Economists have been saying for years that the dollar was headed for a fall against other currencies, and this year it came to pass. The dollar has fallen about 12 percent since September against the euro on persistent concerns about the mounting U.S. budget and trade deficits, as well as a perception that the Bush administration won't intervene in currency markets to keep the dollar from weakening. It may well be good for the economy in the long run, as a number of economists argue, but in the meantime it makes foreign travel more expensive for U.S. tourists and could lead to higher prices at home for imported goods.
9. FLU VACCINE SHORTAGE. Another problem from overseas that came home to roost. The U.S. supply of flu vaccine was cut in half when a factory in a Liverpool, England — yes, the same town that gave us the Beatles — was shut because of contamination. The shortage set off a scramble to use the existing doses to inoculate those who needed it most, namely the elderly, infants and people with chronic conditions. The Food and Drug Administration has been trying to arrange for additional flu shots since October, and have been looking for appropriate vaccines from Canada and Germany.
10. JOBS MOVE OFFSHORE. The trend toward sending jobs overseas continued in 2004, causing worries among U.S. workers who fear they might have their jobs replaced by cheaper labor in other countries. Dell Inc., the giant computer maker, quit routing corporate customers to a technical support call center in India after receiving a raft of complaints. But the company — which now has more people working overseas than in the United States — is still looking well beyond U.S. borders for opportunities and growth. This fall Dell opened a brand new, round-the-clock support center for business customers in Xiamen, China, and plans similar facilities in Japan and Ireland.