Finance news. My opinion.

Falling energy prices cooled inflation in May and U.S. factories rebounded after natural disasters slowed production for the first time in nearly a year.

The latest economic data suggest two of the biggest factors that hampered the economy this spring _ high gas prices and supply disruptions stemming from the Japan crises _ are starting to ease.

Overall consumer prices rose 0.2 percent, the smallest increase in six months the Labor Department said. It was the first drop in energy costs in nearly a year.

Gas prices have fallen since peaking last month at a national average of $3.98 per gallon. On Tuesday, the national average price was roughly $3.69 per gallon. While that is giving motorists some relief, gas prices are still $1 higher than a year ago.

So-called “core” consumer prices, which exclude volatile food and energy, rose by the most in nearly three years last month. Economists say that’s mostly because temporary increases in cotton and other commodities are forcing up costs.

Inflation “is probably now close to peaking,” said Paul Ashworth, an economist at Capital Economics. “While the bigger monthly rise in core prices is a concern, a lot of it was due to temporary factors that could be reversed in the next few months.”

U.S. factories produced more business equipment and construction materials last month, the Federal Reserve said. That boosted manufacturing output 0.4 percent last month, the Federal Reserve said. The gain followed the first decline in 11 months of gains.

Overall industrial production was basically flat for the second month in a row. It was dragged down by a decline in utility activity caused by milder spring weather.

Ashworth said the report confirms that the April decline in factory output was a temporary lull. The March 11 earthquake in Japan created a parts shortage that affected U.S. car makers. And tornadoes in the U.S. slowed factory output in the South. Ashworth said factories are back to increasing production. But the rate of growth has slowed since last year.

“Certainly things have slowed down a bit, but I don’t think it’s a big deal,” Ashworth said. “Things seem to be getting back to normal in Japan, so supply disruptions should ease up and it should unwind itself.”

Economists expect factory output to keep growing in the coming months as Japanese automakers, such as Toyota and Honda, bring production at their U.S. plants back to pre-earthquake levels. Full production likely won’t be restored until fall.

Other reports Wednesday show the economy, for now, is still weak totally free credit score. A survey of manufacturers in the New York region found that activity slowed in June. The New York Federal Reserve’s Empire State index fell to -7.8, down from 12 the previous month. Any reading below zero indicates that the sector is shrinking.

And homebuilders are getting even more pessimistic, according to a report from the industry’s trade group. An index that measures builders’ sentiment fell to 13 in June. That’s the lowest level in nine months and just five points about the record low, reached in January 2009.

Some inflation can be healthy for the economy because it encourages people to spend and invest rather than sitting on their cash. More spending drives corporate growth, which makes businesses more likely to hire people.

But higher food and gas prices have hurt growth this year. Consumers have had to spend more at the grocery stores and to fill their tanks, leaving less money for spending on other goods and services, like appliances, furniture and vacations, that drive the economy.

Federal Reserve Chairman Ben Bernanke has said that the rise in food and gas prices would likely be temporary. The latest readings on consumer and wholesale inflation seem to support that view.

In addition to the drop in consumer gas prices, the government reported this week that wholesale food prices fell in May by the most in nearly a year. Much of that decline resulted from a sharp fall in vegetable and fruit prices. Most economists expect overall food prices to stabilize later this year.

Consumer prices rose 3.6 percent from June 2010 through May 2011, the biggest one-year gain since October 2008. The yearly gain in the index was only 1.1 percent as recently as November.

Excluding the volatile food and energy categories, which account for about 20 percent of the index, core prices rose only 1.5 percent in that same period. That’s below the Federal Reserve’s informal inflation target of about 2 percent.

Autos and apparel drove core consumer prices higher in May. New car prices rose 1.1 percent last month, after rising 0.7 percent in April. Auto dealers have fewer popular fuel-efficient models on their lots because of the supply disruptions. As a result, they are offering fewer deals to boost sales.

Clothing rose 1.2 percent in May, a result of higher cotton prices and increasing labor costs overseas, where most U.S. apparel is made.

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Air France-KLM returned to profit in its latest fiscal year as the rebounding global economy lifted traffic and helped offset a euro1 billion rise in its fuel costs, the airline said Thursday.

Europe’s largest airline by passengers says in a statement it made a euro613 million ($872 million) net profit for the 12 months ending March 31, in contrast to the euro1.6 billion net loss a year earlier when the global economic crisis hammered freight and passenger traffic.

Air France-KLM warned that “uncertainties” including the long term impact of Japan’s earthquake, crises in the Middle East and Africa and elevated fuel prices could weigh on its performance this year. The airline forecast an operating profit higher than the euro122 million it made last year.

Air France-KLM had warned in February that it would miss a targeted improvement in its operating profit due to security issues in North Africa as well as weaker-than-expected revenue in the fourth quarter driven by overcapacity by rivals.

The airline’s fourth quarter earnings were hurt by the Japan earthquake as well as the unrest in the Middle East and Africa. Passenger operations lost euro367 million in the quarter, the airline said, while its freight business lost euro9 million.

In March a French judge filed preliminary manslaughter charges against Air France and jet manufacturer Airbus in connection with the June, 2009 crash of Air France Flight 447 from Rio de Janeiro to Paris. The accident killed 228 people and was the worst in Air France’s history. Last month investigators found the jet’s wreckage on the Atlantic floor nearly 4,000 meters down and successfully brought up the jet’s flight data recorders, which investigators are now examining in a bid to finally discover what caused the accident.

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Home improvement retailers are evolving to meet the needs of budget-conscious consumers stuck in homes they can’t sell.

Home Depot Inc. is focusing more on low-priced items and Lowe’s Cos. on improving customer services such as outdoor equipment repair _ changes dictated by the companies’ first-quarter results, which show customers holding onto their cash until it’s the right time to spend.

Home Depot, the largest U.S. home improvement chain, said Tuesday that its revenue edged down 0.2 percent to $16.82 billion for the quarter that ended May 1, missing Wall Street’s $17.06 billion estimate. Lowe’s, which reported quarterly its earnings Monday, saw its revenue drop 2 percent.

Weather is critical to both chains, and the spring selling season _ their second-biggest in revenue after summer _ typically prompts a flurry of seasonal purchases of plants, patio furniture and barbeque grills. But harsh conditions blanketed most of the nation for much of the first quarter, and shoppers stayed indoors.

So Home Depot and Lowe’s, knowing their customers will come in for spring products once the weather improves, are working now on new ways to keep them coming back. Home Depot raised its full-year earnings forecast, but Lowe’s dampened its outlook.

Home Depot executives said during a conference call Tuesday that their chain is beefing up offerings like paint and soft-sided tool storage as maintenance and repair _ instead of major renovations _ remain at the forefront of consumers’ minds.

Homeowners have plenty of cause for caution, with new-home construction down in April and U.S. homebuilders worrying the housing market won’t recover this year. Shoppers all but abandoned big-ticket projects during the recession.

Home Depot Chief Financial Officer Carol Tome said in an interview with The Associated Press that her company is offering a variety of cost-conscious options, such as cabinet re-facing, for customers who still want to upgrade their kitchens. This price-conscious approach helped contribute to a 1.5 percent increase in the dollar amount of the average transaction at Home Depot for the quarter. At Lowe’s, the average receipt was nearly flat.

Lowe’s Chairman and CEO Robert Niblock also said during a Monday conference call that rising gas prices are pushing consumers to shop at whichever store is the most convenient.

Based on store count, that would put shoppers in Home Depot more often. Lowe’s had 1,751 stores in the U.S., Canada and Mexico as of April 29, dwarfed by Home Depot’s 2,245 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China.

To combat the convenience factor, Niblock says Lowe’s is differentiating its services and products and opening new stores in targeted locations. Lowe’s said Monday that its first-quarter net income fell 6 percent.

Home Depot’s Tome said, however, that it is too early to draw a correlation between gas prices and customer traffic. And her company said Tuesday that its net income rose 12 percent to $812 million, or 50 cents per share, up from $725 million, or 43 cents per share, a year earlier. That beat the 49 cents per share that analysts surveyed by FactSet expected on average.

Mooresville, N.C.-based Lowe’s lowered its full-year outlook to $1.56 to $1.64 per share on a revenue increase of about 4 percent, implying revenue of about $50.79 billion. It previously forecast earnings of $1.60 to $1.72 per share on a 5 percent revenue increase.

Home Depot, based in Atlanta, increased its fiscal 2011 earnings forecast and now expects to earn $2.24 per share, up from $2.20. It kept its revenue forecast at 2.5 percent growth from 2010, when it took in $68 billion, implying revenue for 2011 of $69.7 billion.

Wall Street predicts earnings of $2.30 per share on revenue of $69.72 billion.

Shares of Home Depot gained 27 cents to $37.25 by early afternoon, while Lowe’s stock lost 2 cents $24.82.

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A Moscow tax official who approved a fraudulent $230 million tax return in 2007 has bought luxury real estate in Moscow, Dubai and Montenegro and wired money through her husband’s bank accounts worth $39 million, a U.S. investor said Monday.

All that was done with an average annual household income equivalent to $38,000, according to documents released by William Browder, an American-born investor barred from Russia.

Browder has been campaigning against Russian corruption since 2009 when his lawyer died a year after being sent to prison. Authorities have not explained why Browder was himself expelled as a security risk in 2005 in the first place.

Browder, who used to head up Hermitage Capital Management in Moscow, a multibillion-dollar fund, is seeking to get justice for lawyer Sergey Magnitsky, who discovered the alleged fraud involving the Interior Ministry.

Magnitsky, who died in prison in 2009 after being charged with tax evasion linked to his defense of Hermitage, had discovered that officers at the Interior Ministry had seized ownership documents for three of the fund’s subsidiaries, then used those documents to register their own people as owners and directors.

They then reportedly filed a tax claim, saying they made a much smaller profit than originally described and asked for a tax return, according to Hermitage.

The $230 million refund was made in one day.

Magnitsky’s former employers, including Browder and Jamison Firestone, the head of the law firm where Magnitsky worked, revealed an array of documents Monday, which they said described the wealth of the tax official allegedly involved in the fraud.

The two are working together to expose the officials they believe are responsible for Magnitsky’s death and the tax fraud. More than a year later, Magnitsky’s death remains uninvestigated.

Browder and Firestone said the family of Olga Stepanova, who headed Moscow’s district tax office No. 28 until January this year, had incurred $39 million in expenses in the past few years.

Copies of bank account statements and property registration papers show Stepanova’s husband, an employee of a small construction firm, wire money through Switzerland’s Credit Suisse to build a $8 million luxury house west of Moscow and buy a vacation home in Montenegro and multi-million dollar properties on the Palm Jumeriah in Dubai in the name of his 85-year-old mother cash advance flexible payments.

These transactions were allegedly made several weeks after Stepanova’s tax office authorized the $230 million tax refund.

Firestone on Monday sent the documents to Russia’s chief investigator and petitioned him to open a criminal probe against Stepanova and her colleagues.

Meanwhile, Browder said in a letter to Switzerland’s attorney general that criminal proceeds from the tax fraud may be held on various accounts in Credit Suisse.

The Interior Ministry has acknowledged the fraud but said it has been unable to locate the funds. The ministry said its officials had no part in the fraud and insisted the tax authorities were also innocent and had simply been deceived by the criminals.

Over the past year, authorities have turned down scores of petitions by Magnitsky’s former employers and human rights groups to investigate the Interior Ministry officials that Magnitsky believed were involved in the tax fraud.

Magnitsky posthumously received a prestigious anti-corruption award from Transparency International, an international anti-corruption watchdog.

Browder told the Associated Press on Monday that the documents came from a person who worked with Stepanova and her partners. Browder would not identify the person.

“This information is so complete and so damning that the Russian government will lose any legitimacy it has left in bilateral relations with the West if it doesn’t act and prosecute the officials who killed Sergei Magnitsky and stole $230 million from their own people,” Browder said.

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On the Web:

http://youtu.be/H7yBOEPYJTc

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Post office raising some prices

The sharpest drop in unemployment in more than a quarter century obscures a simple fact: The jobs market still isn’t working for many Americans.

Some 6.3 million people have been out of work and looking for a job for more than six months. The employment-to-population ratio is lower than it was when the recession ended as companies have been slow to add to payrolls. And big sources of hiring in the past — government, health care and retailing — may not be able to reprise that role in the future as lawmakers limit outlays and consumers curb spending.

“The trends are a little bit scary,” said Nobel laureate Michael Spence, a professor at New York University. “There’s been a break in an important part of the social contract” for many Americans who are finding they can’t get ahead.

Mixed messages from the jobs numbers make decisions more difficult for Federal Reserve Chairman Ben S. Bernanke and his central bank colleagues as they wrestle over monetary policy.

Rising prices and falling unemployment — the jobless rate dropped to 8.8 percent in March from 9.8 percent in November, the biggest four-month decline since 1983 — suggest that the Fed should raise rates from near zero later this year to keep inflation in check, according to Joseph LaVorgna, chief U.S. economist for Deutsche Bank Securities in New York.

He sees yields on Treasury securities rising, with the two- year note hitting 1.25 percent to 1.5 percent and the 10-year- note climbing to 4 percent by the end of the year. They were 0.81 percent and 3.58 percent at 5:16 p.m. April 8 in New York, according to Bloomberg Bond Trader prices.

Depressed Employment

Alan Krueger, a former Treasury official, argues that policy makers shouldn’t be tightening monetary policy in the face of depressed employment and elevated long-term joblessness.

“I would like to see QE 2.5,” with the Fed completing its second round of quantitative easing in June and then buying more Treasury securities thereafter, said Krueger, who is now a professor of economics at Princeton University in New Jersey.

That’s not likely to happen, said Roberto Perli, a former Fed official who is managing director of International Strategy & Investment in Washington. The threshold for additional purchases beyond the $600 billion in QE2 is “very high at this point,” he said. The debate at the Fed instead focuses on how fast to remove the record stimulus the central bank has pumped into the economy.

Fed policy makers agreed at their last meeting that “gains in employment seemed to be on a gradually rising trajectory,” though there was still substantial slack in the labor market, according to the minutes of their March 15 gathering.

No Improvement

For Dan LaRue, a 60-year-old former marketing specialist for JPMorgan Chase & Co., there’s scant sign that the jobs market is getting better.

“The reality of what I’m seeing and what my fellow unemployed coworkers are seeing doesn’t jibe” with reports of an improving labor market, said LaRue, who’s been without a full-time job for more than two years. “It’s kind of ugly out there.”

The New York City resident said he’s borrowing money from his 81-year-old mother to help make ends meet. “I hate it, but thank God she’s there,” he said. “I’m willing to take a pay cut, but I don’t think I’m even being considered.”

The ratio of people employed to the population stood at 58.5 percent in March, down 0.8 percentage point from July 2009 when the recovery began and up just 0.3 point from a 27-year low of 58.2 percent in November 2010, according to data from the Labor Department.

Better Measure

The ratio is a better measure of the jobs market because, unlike the unemployment rate, it isn’t affected by changes in the size of the labor force, said Edward Leamer, a professor of management, economics and statistics at the University of California at Los Angeles.

About half of the fall in the jobless rate during the last four months was caused by Americans who gave up looking for work and left the labor force — a development that he said isn’t something to welcome. “It’s people getting so discouraged that they’re dropping out,” said Leamer, who is also director of UCLA Anderson Forecast.

That number may grow later this year as extended government unemployment benefits run out, Krueger added. To collect those benefits, the jobless must show that they are searching for work, and the longer people are without a job, the less time they spend looking, according to a study of 6,025 unemployed that Krueger conducted with Andreas Mueller of Stockholm University in 2009 and 2010.

Long-Term Unemployment

Some 45.5 percent of those classified by the Labor Department as jobless in March had been without work for more than six months, just off the record high of 45.6 percent set in May last year.

The waning intensity of their searches suggests that they may not be putting as much downward pressures on wages — and inflation — as some macroeconomic models assume, said James Stock, a professor of economics at Harvard University in Cambridge, Massachusetts.

That doesn’t mean the Fed should start worrying about accelerating prices, according to Stock. “We still have a very weak economy,” he said. “Disinflation strikes me as a much greater risk than inflation at the moment.”

Gwen Robbins, a 61-year-old resident of Savannah, Georgia, is a self-styled 99er, so called because her 99 weeks of employment benefits ran out in January. Robbins, an office manager until December 2008, said she’s “applied for probably close to 400 jobs” since then.

‘Giving Up’

“I’m giving up on the private sector,” said Robbins, when asked if she’s continuing her search. Many companies seem more interested in hiring younger applicants, she said, adding that she now is seeking public-sector work with the city.

The jobs-market recovery remains “lackluster,” the International Monetary Fund said in its World Economic Outlook report. The Washington-based lender forecasts that U.S. unemployment will average 8.5 percent this year and 7.8 percent in 2012.

The flaws in the labor market were aggravated by the recent recession but didn’t start there, according to Krueger. The employment-to-population ratio in the last expansion, which began in 2002, never reached the 64.7 percent peak it attained in 2000 during the previous upturn.

Rising income inequality and sluggish wage growth during the last expansion also suggest that the labor market’s troubles are ingrained, Spence said. Average hourly earnings showed little growth from 2002 to 2007 when adjusted for inflation.

Machines Replacing People

Economists posit a variety of reasons for the dysfunction. Spence attributes it partly to globalization, as China and other emerging markets take work Americans once did. Leamer points to technology, with machines replacing people in the production process. For Krueger, some of the fault lies with the U.S. education system and training programs for not providing employees with the skills they need.

The challenges facing the U.S. involve both the quality and quantity of jobs created, Spence said. A study he did with New York University researcher Sandile Hlatshwayo showed that virtually all of the growth in employment between 1990 and 2008 was in the nontradable sector of the economy, which isn’t subject to international competition. Government and health care together accounted for almost 40 percent of the jobs added.

Employment growth in that sector is likely to slow as government spending is restrained, the authors argue in a paper for the Council on Foreign Relations in New York. Value added per person grew 0.7 percent a year in the period studied, which explains why wage gains for these types of jobs were limited, they say.

Bigger Compensation

Value-added in the tradable arena, which includes manufacturing and financial services, grew by an average 2.3 percent a year, allowing these employees to enjoy bigger compensation increases. The sector as a whole added few net jobs, though, as manufacturers in particular moved production overseas, Spence and Hlatshwayo wrote.

The result, according to the paper: growing income inequality as many of the jobs the U.S. created were low-paying ones that added limited value.

“The American dream is being seriously tested right now,” Leamer said. “It’s an emergency for the middle class.”

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Treasuries snapped a four-day decline before a government report that economists said will show U.S. new-home sales in February failed to recoup losses from the previous month.

Traders reduced bets on inflation after figures yesterday showed prices of existing U.S. homes dropped in January. Demand for the relative safety of government debt increased as Japan struggled to avert a nuclear meltdown, the U.S. and its allies bombed Libya, and speculation increased that Portugal will need to be bailed out.

“They will all hurt global economic growth,” said Kei Katayama, leader of the foreign fixed-income group in Tokyo at Daiwa SB Investments Ltd., a unit of Japan’s second-largest brokerage. “Yields will push down.”

Ten-year rates were little changed at 3.31 percent as of 11:43 a.m. in Tokyo, according to Bloomberg Bond Trader. The 3.625 percent note maturing in February 2021 traded at 102 5/8. The rate had climbed 14 basis points in the previous four days.

Purchases of new homes rose 2.1 percent to a 290,000 annual pace, after slumping 13 percent in January, according to the median estimate in a Bloomberg News survey. Home prices fell 3.9 percent in January from a year earlier, the Federal Housing Finance Agency reported yesterday.

The difference between yields on 10-year notes and Treasury Inflation Protected Securities has narrowed to 2.38 percentage points from 2 cash advance no fax.57 percentage points on March 8, which was the widest since 2008. The spread is a gauge of trader expectations for consumer prices over the life of the debt.

Nuclear Plant

Earthquakes rattled Japan’s crippled nuclear plant today. The U.S.-led alliance prepared to direct additional attacks against Libyan leader Muammar Qaddafi’s ground forces.

Portugal’s government may collapse as the country’s parliament votes on budget cuts that have divided lawmakers, JPMorgan Chase & Co. economist Nicola Mai wrote in a note to clients. “This suggests that the sovereign will likely access” the European Financial Stability Facility “in the near term,” London-based Mai wrote.

“There are some risks in the U.S. economy,” said Takuya Yamamoto, who helps oversee the equivalent of $118 billion as a portfolio manager in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co., Japan’s second-largest life insurer. Ten-year yields will probably be near current levels by year-end, he said.

The Federal Reserve is scheduled to purchase $6.5 billion to $8.5 billion of debt maturing from May 2018 to February 2021 today as part of its plan to support the U.S. economy, according to its website.

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Bank of England policy maker Martin Weale said Britain needs an increase in interest rates now to prevent higher prices becoming entrenched in the economy.

“The longer inflation stays above the target and the further it rises, the greater the risk that inflationary expectations will become built in,” Weale wrote in an article the Guardian published today. “These arguments make a powerful case for a modest rise in the bank rate” as “the costs of a small rise now would be lower than the eventual price of addressing higher ingrained inflation.”

Weale this month joined Andrew Sentance in voting for a quarter-point rate increase, after inflation accelerated to 3.7 percent in December, compared with the bank’s 2 percent target. The central bank’s Monetary Policy Committee also has to take into account signs the economic recovery is fading, after initial estimate from the statistics office showed the economy shrank 0.5 percent in the fourth quarter.

Recent gross-domestic-product figures show that the economy is “appreciably weaker than expected,” Weale said. The 0.5 percent contraction compared with economists forecast for 0.5 percent growth.

Inflation Pressures

Most of the recent increase in inflation has been due to the weakness of the pound, higher energy prices and an increase in the U.K.’s sales tax, Weale said. Still, there is a risk that some “one-off” pressures will persist, and that “continuing rapid economic development in China and elsewhere will lead to persistent upward pressure on commodity prices,” he said electronic check payday advance.

The pound was little changed against the dollar today and was trading at $1.5857 as of 9:06 a.m. in London. It weakened 0.1 percent against the euro to 85.92 pence.

While Weale and Sentance voted to increase the benchmark rate at the Jan. 13 meeting, Adam Posen kept up his call for more stimulus to aid growth. The remaining six members of the panel, including Governor Mervyn King, voted to leave the rate on hold and keep its bond-purchase program at 200 billion pounds. ($317 billion).

Britons’ expectations for inflation for the next year rose in January to their highest level since 2008, Citigroup Inc. said on Jan. 28. The median prediction for price increases in the coming 12 months climbed to 3.6 percent from 3.5 percent in December, it said, citing a survey by YouGov Plc.

“If growth resumes shortly, my concerns about inflationary expectations would remain,” he wrote. “But were the recent weakness to mark the start of a sustained new downturn, inflationary pressures would be likely to fade without a bank rate increase.”

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French drugmaker Sanofi-Aventis SA said Thursday a clinical trial showed its drug candidate iniparib did not improve survival or slow disease progression in patients with breast cancer.

The late-stage clinical trial was designed to evaluate iniparib as a treatment for “triple negative” breast cancer, a type of breast cancer that is particularly difficult to treat. The study involved 519 patients whose cancer had metastasized or spread to other body parts. The trial compared a chemotherapy regimen including iniparib to one without it, evaluating its effects on overall patient survival and the amount of time patients lived before their disease resumed progressing or they died.

Sanofi-Aventis said there was not a significant difference between the regimen that included iniparib and the one that did not. Both regimens included the cancer drug Gemzar and the chemotherapy drug carboplatin.

However, the company said some patients who had been treated with one or two other therapies before enrolling in the trial did benefit from the iniparib regimen.

Sanofi-Aventis said 15 to 20 percent of breast cancer patients have the “triple negative” type of the disease, and they have a worse prognosis than other types of breast cancer. The disease is called triple negative because the tumors have normal levels of three proteins that are often found in high levels in breast cancer patients. Patients are usually treated with chemotherapy because the cancer does not respond to hormone-based drugs like tamoxifen, or drugs that target epidermal growth factors like Herceptin.

Shares of Sanofi-Aventis fell 25 cents to $35 in aftermarket trading. The stock picked up 6 cents during the day before Sanofi announced the trial’s results.

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A small St. Louis company is taking gooey butter cake worldwide.

Siblings Marilyn Ann Scull and Dale Allen Schotte began commercial production of their mother’s recipe for the signature St. Louis dessert in 2006, a few weeks after they opened Park Avenue Coffee in Lafayette Square. In their first full year of production, they turned out about 700 cakes in a tiny space at the rear of the store at 1919 Park Avenue.

Now they have a new company name, Ann & Allen Baking Co.; a new production facility with 2,000 square feet in Dogtown; and a new line of cake mixes.

By mid-December, Ann & Allen had baked more than 22,000 cakes this year for Park Avenue Coffee, other local retail outlets, catering and online sales. They now make more than 70 flavors and have shipped cakes this year to 79 countries, including Afghanistan and New Zealand.

What’s more, they’ve sold more than 10,000 boxes of their gooey butter cake mix in its first year of production. Schotte says the mix is currently sold at 56 stores in 15 states. Straub’s and Eckert’s are their two largest customers in the metro area.

And at 9 p.m. Thursday, Park Avenue Coffee will reach a national cable TV audience when the Food Network pits it against another St. Louis specialist, Gooey Louie, on “Food Feuds.”

As with most success stories, Scull’s and Schotte’s has some twists. Schotte spent 20 years in the computer industry, primarily working for an Ohio-based company that specializes in automobile dealerships. He was moonlighting as a consultant when he was hired by the owners of what was then called Perc on the Park. In addition to utilizing his skill with computers, they turned to him for advice on everything from retail operations to décor.

“I told them, ‘If you ever want to sell, let me know,’” Schotte says.

When they did just that two years later, Schotte told them he wasn’t interested anymore. But that soon changed, after he got a call from Scull.

“My sister calls me all hysterical,” Schotte says. She had quit her job with Domino’s pizza, where she had worked for 20 years. “She said, ‘That’s it, I’m done.’”

When Schotte raised the possibility of buying Perc in the Park, Scull resisted, saying she didn’t even drink coffee.

“I said, ‘Just put away the pepperoni and substitute little beans,’” Schotte says.

They bought the shop, renaming it Park Avenue Coffee, then added a quintessential local treat, gooey butter cake, to the menu. Scull called their mother, Evelyn Thomeczek Schotte, for the recipe.

Evelyn Schotte was one of 13 children who grew up on her family’s farms in Leslie