The software company posted a second-quarter net loss of $429,000, or 5 cents per share, compared to $1.1 million, or 12 cents per share in the year-ago quarter. Revenues grew to $1.3 million from $101,200.

For the first six months of 2008, Streamline reported a net loss of $1.2 million, or 13 cents per share, versus a loss of $1.5 million, or 16 cents per share, in the same 2007 period. Revenues grew to $1.6 million from $864,300.

Brian Patsy, president and CEO, noted in a news release that revenues have grown more than 50 percent year over year, while the net loss has narrowed. Four new recently announced contracts should add more than $5 million to future revenues.

“The addition of four new clients, two through our partners and two direct by our sales force, indicate we are achieving significant traction with our sales and marketing initiatives so far this year,” Patsy said.

Shares of Streamline (NASDAQ: STRM) opened at $2.54 Wednesday morning.

Streamline Health Solutions, based in Cincinnati, is a supplier of workflow and document management tools, applications and services to businesses, specifically health-care organizations.

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“Japan's economic growth has been sluggish,'' the central bank said in its monthly economic report in Tokyo today, downgrading its evaluation for the second month. In July, policy makers said that the expansion was “slowing further.''

Bank of Japan Governor Masaaki Shirakawa said yesterday that the nation's recovery may be delayed because rising oil and materials costs as well as a global slowdown are denting demand. Japan's economy contracted last quarter, putting it on the brink of its first recession in six years, and economists say the slump will prevent the bank from raising interest rates until 2009 at the earliest.

“The BOJ de facto admitted that the economy is in recession,'' said Masaaki Kanno, a former central bank official and now chief economist at JPMorgan Chase & Co. in Tokyo. “The bank will not move for quite a long period.''

Today's report elaborates on a statement issued yesterday, when the central bank kept the key interest rate unchanged at 0.5 percent. The rate, the lowest among industrialized economies, hasn't been raised since it was doubled in February 2007.

The Bank of Japan cut its view of exports, production, capital investment and consumer spending in today's report.

“Growth in exports is expected to remain only modest for the time being, due to the slowdown in overseas economies,'' the bank said.

Soaring material costs and weakening sales have eroded profits, prompting companies to pare manufacturing, investment and hiring. Production, exports and household spending declined in June, and the unemployment rate climbed to the highest in almost two years.

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Shelton, who has more than 24 years of financial services experience, replaces Judy Egan, who left the bank on July 22. Officials did not elaborate on her departure, calling it a "personal matter."

Shelton said his primary objectives are to improve the company’s financial situation and grow the bank, which caters to small businesses in the Scottsdale market.

Valley First, like many other community banks in Arizona, has taken hits on its balance sheet because of bad loans and the real estate crash. The bank failed to turn a profit in the last two quarters, reporting a $700,000 loss in that span, according to filings with the Federal Deposit Insurance Corp.

"The economy has slipped," said Shelton, who held an analyst position at the bank for a year before being tapped for the lead role.

Shelton earned a master’s of business administration from University of Phoenix and a bachelor’s degree from the University of Arizona. He serves with numerous civic organizations including the Maricopa Agricultural Center Advisory.

Valley First Community Bank was established in 1997 and is among many financial firms under the Capital Bancorp Ltd. (NYSE: CBS) umbrella. The holding company, which maintains dual headquarters in Lansing, Mich. and Phoenix, sold four of its affiliated banks in Michigan in March and consolidated two others in April.

The company reported a profit of $623,000 in the second quarter, down 90 percent from $6.3 million during the same period a year ago.

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But your employer isn’t the only one who’s unenthusiastic about that idea. Fed chief Ben Bernanke is counting on a weak labor market to keep employees from demanding wage hikes, which could in turn boost inflation. With unemployment rising and jobs moving overseas, you’re probably not in the mood to push it anyway.

So the good news is that the Fed’s probably right when it says that we’re not headed for a replay of the stagflation of the 1970s, replete with its so-called wage-price spiral. Unfortunately, that means Americans are going to be feeling poorer - with no end in sight.

On Thursday, the government said consumer prices soared 5.6% from a year ago in July, the biggest year-over-year rise in 17 years. Much of that increase was driven by the soaring costs of food and energy, though Bank of America economist Lynn Reaser notes that prices were sharply higher across the board.

"This number was a shocker," Reaser says, adding that practically "the only benign increase was in health care," where prices - after years of strong growth - were a modest 3.5% above year-ago levels.

The textbook response to soaring inflation is for the Fed to raise interest rates. But Fed chief Ben Bernanke has spent the past year slashing rates in a bid to prop up the financial sector, which is laboring under a mountain of bad loans and broken credit markets. Where financial institutions used to borrow heavily in short-term markets such as the repo market, they now get much of their cash via various federal lending programs.

"They can’t tighten credit now, because of where banks are getting their funding," says Howard Simons, a strategist at Bianco Research in Chicago.

Moreover, the Fed appears willing, for now, to accept a few months of big headline inflation numbers as long as there’s no sign of the dreaded wage-price spiral - the 1970s phenomenon in which inflation took root as pinched workers demanded raises.

With the economy slowing, and wages stagnant for most of the past decade, a weak labor market is giving the Fed room to stand pat. Unemployment has risen by more than a percentage point, to 5.7%, since the housing boom peaked in the middle of this decade. The four-week seasonally adjusted moving average of new jobless claims was 440,500 last week - up 40% from a year ago.

Along with the recent decline in energy prices and a rally in the value of the dollar, the soft labor market numbers should ease the pressure on wage growth, Reaser says. She adds that next month’s inflation numbers should look better, given the 20% drop in the price of crude oil since mid-July.

But what’s good for the Fed, in this case, is bad for consumers. Combine a slack labor market with falling prices for stocks and houses, and it’s clear that Americans’ finances are getting stretched by the month - with no end in sight.

"The American worker does not have a whole lot of bargaining power right now," says Simons. "We’re looking at the impoverishment of the American wage earner." 

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For the quarter ended July 27, the company earned $164.8 million, or 12 cents per share, down from a profit of $473.5 million, or 34 cents per share, in the same period a year earlier.

The latest quarter’s results included stock options costs of 2 cents per share and items related to acquisitions totaling 2 cents per share.

Analysts, on average, were expecting a profit of 14 cents per share, according to a poll by Thomson Financial. The estimates include stock options costs, but other one-time items are generally excluded.

Revenue fell 28% to $1.85 billion from $2.56 billion.

Analysts were predicting sales of $1.84 billion.

"Applied Materials delivered financial and operational performance that was in line with our quarter forecast during a difficult semiconductor industry environment," said Mike Splinter, president and chief executive, in a statement. "While our silicon business was down, revenues increased in our display, service and solar businesses."

Shares of Applied Materials (AMAT, Fortune 500) closed up a penny at $18.47, and added 15 cents to $18.64 in aftermarket activity. 

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The gap shrank 4.1 percent to $56.8 billion from $59.2 billion in May, the Commerce Department said today in Washington. Shipments to Germany and the U.K. rose more than 4 percent, exports to Italy jumped 9.7 percent, and sales to Argentina and Brazil also climbed.

Rising international demand is helping manufacturers like Caterpillar Inc. withstand a slowdown in U.S. sales, and today's figures may lead the government to lift its second-quarter economic growth estimate. The boost from trade may wane later this year as expansions in Europe and Japan stall.

“The balance of trade may continue to show some improvement, but I think export growth probably hit a peak,'' David Resler, chief U.S. economist at Nomura Securities International Inc. in New York, said in an interview with Bloomberg Radio.

Economists had forecast the gap would widen to $62 billion from an initially reported $59.8 billion in May, according to the median of estimates in a Bloomberg News survey. Projections of the deficit ranged from $58 billion to $65.7 billion.

A weaker dollar has helped stoke American exports. The currency has slumped 24 percent versus the euro in the past five years. It recouped some losses in the past four weeks as the outlook for Europe's economy dimmed. The dollar was little changed today at $1.4897 per euro at 11:13 a.m. in New York.

Biggest Since 2004

Exports increased 4 percent, the biggest percentage jump since February 2004, to $164.4 billion, led by record overseas sales of food, industrial supplies, capital goods and consumer goods.

Imports rose 1.8 percent to $221.2 billion after increasing 0.3 percent in May. The import figures reflected a record $44.5 billion in purchases of foreign petroleum as well as record purchases of industrial supplies from overseas and increased demand for foreign-made autos and parts.

A barrel of imported crude oil cost $117.13 in June, up from $106.28 the previous month.

After eliminating the influence of price changes, the trade deficit narrowed to $39.1 billion, the lowest since December 2001, from $43.5 billion in May. Those numbers are used to calculate gross domestic product.

Averting Contraction

The Commerce Department last month estimated the economy expanded 1.9 percent in the second quarter, with the biggest contribution from trade since 1980 averting a contraction.

“We're in the sweet spot for deficit reduction,'' said Robert Stein, senior economist at First Trust Advisors in Lisle, Illinois, who forecast a June gap of $60 billion. He said today's figures may add as much as 0.9 percentage point to second-quarter growth.

Excluding the effect of prices, non-petroleum imports declined during June.

The U.S. trade deficits with Canada, Japan and the European Union widened. The gap with Mexico shrank as exports to that country reached a record.

The gap with China was $21.4 billion, compared with $21 billion in May.

Some U.S. lawmakers accuse China of keeping its currency undervalued to boost exports. Treasury Secretary Henry Paulson, writing this month on the Web site of Foreign Affairs magazine, said yuan strengthening still has “much further to go.'' Of the advance since a fixed-exchange rate ended in July 2005, Paulson said 70 percent has come about after he initiated semiannual economic talks with China in 2006.

OPEC Gap

The deficit with the Organization of Petroleum Exporting Countries expanded by $200 million to a record $18.1 billion.

U.S. manufacturers have received a boost from export orders as economies overseas grew and the dollar weakened.

Caterpillar, the world's largest maker of earthmoving equipment, said July 22 that second-quarter profit climbed 34 percent, helped by demand in China and the Middle East. Developing markets this year may grow more than six times as fast as in North America, where the U.S. may find it hard “to avoid a recession,'' Chief Executive Officer Jim Owens said in a statement.

Deere Earnings

Moline, Illinois-based Deere & Co., the world's largest maker of tractors and combines, is scheduled to report third- quarter results tomorrow and analysts surveyed by Bloomberg News forecast net income rose to $587 million from $537 million a year earlier.

Deere CEO Robert Lane is counting on orders for tractors in North America, as well as in Brazil and Russia, to counter declining revenue from construction and forestry machinery amid the U.S. housing slump.

As economic growth in Japan, Germany and other major trading partners weakens and the dollar rebounds, the outlook for exports has softened. The trade-weighted dollar index yesterday rose to the highest level since February.

“We continue to see global growth, perhaps not at the same rate, but it will continue to be solid,'' Commerce Secretary Carlos Gutierrez said in an interview with Bloomberg Television.

Harvard University economist Martin Feldstein, a member of the committee that charts the American business cycles, said yesterday the U.S. dollar is cushioning the slowing in the economy and the currency has further to fall.

“Market pressures over time are going to put downward pressure on the dollar,'' Feldstein, who retired in June as president of the National Bureau of Economic Research, said in a Bloomberg Radio interview. “A more competitive dollar has been the driving force in keeping'' gross domestic product expanding.

The Institute for Supply Management's index of new export orders for manufacturers fell last month to the lowest level this year.

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Restrictions on construction, factories, cars and mining to cut pollution and traffic will be a “short-term'' drag on economic output, Goldman said in a report. Most limits are imposed in Beijing and five nearby provinces and cities, which generate about 26 percent of China's economic output, Hong Kong- based analysts Yu Song and Hong Liang wrote in the Aug. 8 report.

“These measures will likely lead to a visible slowdown in real economic activities, both production and consumption, in August and September,'' the Goldman report said. Though activity will pick up in October, “we expect a gradually softening economic path in the second half of 2008,'' the analysts wrote.

The CHART OF THE DAY compares gross domestic product growth among the so-called BRIC nations, Brazil, Russia, India and China, since July 2001, when Beijing was selected to host the games. China has had the highest year-on-year expansion since the fourth quarter of 2003, when India grew 11.3 percent on a record harvest and the lowest interest rates in three decades.

About 500,000 foreign visitors will attend the Olympics, with almost all 7 million tickets to the events sold, according to the Beijing statistical bureau and games organizing committee.

The Olympics run through Aug. 24 and the Paralympics follow from Sept. 6 to Sept. 17.

“While the long-term economic impacts of the Olympic Games are likely to be minimal, it increasingly looks like the games' short-term economic impacts are likely to be negative,'' the Goldman report said.

The city has spent about $70 billion to improve air quality, build subways, sports stadiums and an airport terminal to prepare for China's debut as an Olympics host.

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Productivity, a measure of employee output per hour, rose at a 2.2 percent annual rate, the Labor Department said today in Washington. The gain, which follows a 2.6 percent increase in the previous three months, was less than anticipated. Labor costs climbed at a 1.3 percent pace, also less than forecast.

The figures may help Federal Reserve Chairman Ben S. Bernanke, who forecasts that inflation will slow, keep interest rates unchanged through year-end. Companies eliminated 165,000 jobs last quarter to shore up profits, and still managed to get more output with fewer workers.

“Productivity still looks pretty good,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who used to work at the Fed. “We are seeing good cost control from businesses. It's good news for the Fed.''

Treasuries were little changed. The yield on the benchmark 10-year note was 3.91 percent at 11:18 a.m. in New York, compared with 3.93 percent late yesterday. Stocks surged as oil prices dropped.

Revised Labor Department figures for the prior three years showed productivity rose an average 1.4 percent from 2005 to 2007, down from a previously estimated 1.6 percent. Compared with the second quarter of last year, productivity rose 2.8 percent.

`Impressive' Resilience

“Historically, productivity growth has tended to suffer during periods of energy-price shocks,'' David Greenlaw, chief U.S. fixed-income economist at Morgan Stanley in New York, said in a note to clients. “The current year-over-year growth rate of just a shade under 3 percent demonstrates an impressive degree of resilience.''

Today's report may also ease concern that the productivity surge that began in 1996 was waning. Efficiency increased an average 2.9 percent in the nine years ended in 2004.

Economists had forecast a 2.5 percent rate of increase in the second quarter, according to the median forecast in a Bloomberg News survey. Estimates ranged from gains of 0.7 percent to 3.6 percent.

Unit labor costs, which are adjusted for efficiency gains, were projected to rise at a 1.4 percent pace, according to the survey median.

Inventories at U.S. wholesalers rose faster than forecast in June, led by gains in stockpiles of higher-priced petroleum, farm goods and metals, a report from the Commerce Department also showed. The 1.1 percent gain in the value of stockpiles followed an increase of 0.9 percent in May.

Hours worked dropped at a 0.5 percent pace in the second quarter, the fourth consecutive decline, according to the productivity report. Output increased at a 1.7 percent rate.

Hourly Compensation

Compensation for each hour worked climbed at a 3.6 percent annual rate after a 5.2 percent gain in the prior quarter.

Among manufacturers, productivity dropped at a 1.4 percent pace, the biggest decline since the last three months of 2003.

Employers remained focused on maintaining productivity at the start of the second half of the year. Payrolls fell in July for a seventh straight month and the number of hours worked dropped. Americans labored an average 33 hours and 36 minutes per week, six minutes less than in June and matching the shortest workweek since records began in 1964, government figures showed.

YRC Worldwide Inc., the biggest U.S. trucking company by sales, reported a second-quarter profit that ended two quarters of losses as it shut terminals, cut jobs and changed management at some regional brands.

Focus on Efficiency

“Our actions to improve operational efficiency, get our regional companies back on track and reduce overhead costs have been effective,'' Chief Executive Officer Bill Zollars said in a statement on July 24. “Further operational improvements'' are planned for this quarter.

In the 1990s, former Fed Chairman Alan Greenspan was one of the first to recognize productivity was accelerating because of the increased use of computers and the Internet, and that the improvement would contain inflation even as the economy gained strength and unemployment stayed low. The realization allowed the Fed to keep interest rates little changed from 1996 to 1999.

The risks of softening growth and rising inflation led central bankers to keep the benchmark rate unchanged at 2 percent this week.

“Although downside risks to growth remain, the upside risks to inflation are also of significant concern,'' Fed officials said Aug. 5 in a statement. “The committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.''

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Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of 25 economists surveyed by Bloomberg News. The Cabinet Office will release the report on Aug. 13 at 8:50 a.m. in Tokyo.

Prime Minister Yasuo Fukuda, who last week replaced his economic ministers in a bid to boost his popularity, is planning relief measures to help companies and consumers cope with record energy costs. Toyota Motor Corp. yesterday reported the biggest drop in earnings in five years as U.S. sales slumped.

“What you're going to see is a long, slow, modestly painful recession,'' said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. “It's going to fall heavily on both workers and stock holders who are suffering lower returns as profits come down.''

Exports probably fell 2.4 percent last quarter, robbing Japan of the engine that drove growth over the past six years, according to economists surveyed. Shipments abroad increased every quarter except one since the most recent recession in 2001.

The economy probably shrank 0.6 percent from the first quarter. Net exports — the difference between exports and imports — subtracted 0.1 percentage point from growth, economists said.

Toyota, Japan's biggest company, yesterday cut its sales forecast for the year ending March 2009 by 3.5 percent to 8.7 million vehicles. Since June, Toyota has fired 800 workers at a Kyushu-based subsidiary, where the company is cutting production of sport-utility vehicles and Lexus sedans bound for the U.S.

Shedding Workers

“The Toyota story is totally consistent with the macro data,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. “Companies have been quick to get rid of workers in response to slowdowns in some sectors.''

The unemployment rate jumped to 4.1 percent in June from 3.8 percent three months earlier. Wage growth is also slowing.

Summer bonuses at the country's biggest companies, which tend to pay more than their smaller counterparts, dropped this year for the first time since 2002, according to a survey by the Keidanren business lobby.

Domestic demand, which includes company and consumer spending, probably accounted for 0.5 percentage point of the economy's quarter-on-quarter contraction. The figures for household spending will probably exaggerate the decline from the first quarter, when the leap year gave consumers an extra shopping day in February, economists said.

Bank of Japan

The government yesterday said the economy is “weakening'' for the first time since 2001. The worsening economy and the fastest inflation in a decade will compel the Bank of Japan to keep its benchmark interest rate at 0.5 percent for the rest of the year at least, according to economists surveyed last month.

Still, economists say the current slowdown is unlikely to be as severe as past recessions because the corporate sector is better able to handle higher costs and weakening U.S. demand. Businesses have trimmed excess debt, workers and capacity, Economic and Fiscal Policy Minister Kaoru Yosano said yesterday.

“Most of the measures suggest that things aren't as good as they were 12 months ago, but it's nothing like 2001, 1998, or 1993,'' said Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo.

Companies plan to increase capital investment by 4.1 percent in the year ending March, according to a survey released this week by the Tokyo-based Development Bank of Japan. While that's slower than last fiscal year's 7.7 percent, it's better than the 10 percent decline recorded during the 2001 recession.

The Bank of Japan's most recent business survey showed that labor demand is close to a 16-year high. The jobs-to-applicants ratio was at 0.91 in June, meaning almost every person who wants a job can get one. During the previous recession seven years ago, there were two applicants competing for every position.

“When you say recession, it triggers images of 1998 or 1993,'' Jerram said. “You're having a period of sub-par growth, but it's not the sort of downturn we saw three times during the previous 15 years.''

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Consumer inflation in June climbed 0.8 percent, the most since September 2005, the Commerce Department said today in Washington. Spending increased 0.6 percent, more than forecast, compared with a gain of 0.8 percent the prior month. Price jumps in petroleum and chemicals also swelled the value of orders to American factories in June.

Tax rebates from $168 billion in fiscal stimulus will provide only a temporary boost for Americans facing $4 a gallon gasoline and unemployment at the highest level since 2004. Fed officials, meeting tomorrow, must find a way to acknowledge the risk of accelerating inflation without signaling a rate increase that would worsen the economic slowdown, economists said.

“There is a bit more inflation pressure than many people anticipated,'' said Kevin Logan, a senior market economist at Dresdner Kleinwort in New York, who correctly forecast the gain in spending. “Inflation pressure is more widespread and that has to be some concern for the Fed.''

The Fed's preferred gauge of prices, which excludes food and fuel, climbed 0.3 percent, more than economists forecast.

Treasuries fell in the hour after the report before surrendering their losses as traders turned their attention to tomorrow's interest-rate decision. The yield on the benchmark 10-year note was 3.93 percent at 11:14 a.m. in New York, little changed from Aug. 1. The Standard & Poor's 500 Index dropped 11.42 points, or 0.9 percent, to 1,248.89.

Focus on Language

“I'd expect more hawkish language from the Fed tomorrow because of where inflation is, but I don't expect a change in the policy rate,'' said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. “The economy is fairly weak, there are ongoing problems in financial markets and there's not a whole lot of support for consumer spending after the rebate checks are spent.''

Economists had forecast spending would rise 0.4 percent, after an originally reported 0.8 percent increase in May, according to the median of 67 estimates in a Bloomberg News survey. Projections ranged from a 0.5 percent decline to a 0.9 percent gain.

The core inflation rate exceeded economists' forecasts for an increase of 0.2 percent, according to the median estimate in the Bloomberg survey. The price measure was up 2.3 percent from June 2007, the biggest year-over-year increase since December.

European Scene

Price pressures are also building in Europe, where producer prices rose the most in at least 18 years in June on soaring energy costs. The 8 percent increase from a year ago in factory prices in the 15 nations that use the euro was the biggest since the series began in 1990, the European Union statistics office in Luxembourg said today.

U.S. incomes increased 0.1 percent after jumping 1.8 percent the prior month, today's report showed. The median forecast was a decline of 0.2 percent. About $28 billion in rebates went out in June, compared with about $50 billion in late April and May, according to Treasury Department figures.

Investors are betting the Fed will hold the benchmark rate unchanged at 2 percent tomorrow, according to federal funds futures contracts. Fed Chairman Ben S. Bernanke on July 15 told lawmakers that the economy faced threats to both growth and inflation.

Adjusted for inflation, spending decreased 0.2 percent after rising 0.3 percent in May.

Factory Orders

A separate Commerce Department showed factory orders in the U.S. increased more than forecast in June, propelled by gains in petroleum and chemicals that reflected soaring prices. The 1.7 percent gain in bookings to $457.6 billion was the biggest jump this year, the report showed.

“These numbers are somewhat inflated by prices, maybe even outside of petroleum,'' said David Sloan, senior economist at 4Cast Inc. in New York. “The underlying picture is fairly flat'' for manufacturing.

A private report showed planned job cuts by U.S. employers soared last month.

Firing announcements increased to 103,312 last month, up 141 percent from 42,897 in July 2007, Chicago-based Challenger, Gray & Christmas Inc. said in a statement today. It was the biggest year-over-year percentage increase since November 2001, at the end of the last official recession.

Rebate Benefit Fades

Most economists are forecasting the lift from the rebates will fade in the second half of the year. Purchases of autos and light trucks dropped in July to the lowest level since 1993, industry figures last week showed.

Economists surveyed by Bloomberg in the first week of July forecast economic growth to slow to 1.4 percent in the third quarter and to 0.5 percent in the fourth quarter. The Labor Department last week said U.S. nonfarm payrolls fell by 51,000 in July, bringing the total payroll reductions so far this year to 463,000.

The economy shrank at a 0.2 percent pace in the last three months of 2007 and grew at about an average 1.5 percent annual pace in the first six months of 2008, government data last week showed.

With the economy on the brink of a recession, consumers are focusing their purchases on staples while cutting back on luxuries like $4 lattes, causing sales to slump at Starbucks Corp. the world's largest chain of coffee shops.

Starbucks last week said it will close more U.S. stores than it will open next year after it posted its first loss in 16 years as a public company.

“Until the economy significantly improves, we're just trying to do what we can to get through this storm,'' Starbucks Chairman Howard Schultz said on a conference call.

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