Fed up?

As President Bush and challenger John Kerry traverse the country, one issue likely to help determine the outcome of the election is one which they cannot control: the state of the economy.

Come Election Day, the small number of undecided voters will likely cast their ballots based on where they believe the U.S. economy is headed. That's why every release of economic data over the next two months will elicit two very different responses.

For example, when the economy created a lower-than-expected number of jobs last month, Mr. Bush said the "economy is strong and getting stronger." In responding to the administration's comment that the economy had turned the corner, Mr. Kerry said, "It must have been a U-turn."

Meanwhile, the Federal Reserve is raising interest rates to keep inflation at bay, but that may also slow the rate of growth. The only question is, how much?

While Mr. Kerry has remained relatively quiet about the rate hikes, Mr. Bush has supported Fed chairman Alan Greenspan's decision. That's a far different approach than the one taken by Mr. Bush's father, who blamed Mr. Greenspan for hurting his 1992 campaign by failing to cut rates quickly enough to generate a strong recovery before Election Day.

Will the outcome be different this time, as well?

Toys aren't us

If Toys "R" Us sells its toy division, which is a distinct possibility after the company outlined major restructuring plans this month, the company will have come full circle.

Despite its position as the nation's second-largest toy retailer, Toys "R" Us has been battered in recent years by price wars from discounters, particularly industry leader Wal-Mart. "How do you make a profit in a business where margins are so squeezed?" said consultant Chris Byrne. "Ironically, this is what Toys "R" Us was doing in the '60s and '70s, as they were trumping all the regional toy chains."

Since the mid-1990s, though, when Wal-Mart ramped up its toy department, Toys "R" Us sales have been inconsistent. In the past year, the company's U.S. revenues fell 4 percent to $6.48 billion, prompting plans to reduce operating expenses by more than $125 million by 2005.

Founded by Charles Lazarus in 1948 as a single baby-furniture store in Washington, D.C., the now $11.6 billion company with nearly 1,500 stores around the globe appears ready to shift its focus back to its roots-its more profitable Babies "R" Us stores.

The 200 Babies "R" Us stores, which sell cribs, bedding, and other baby accessories, posted sales of $1.76 billion last year, up nearly 11 percent.

Balance Sheet