There was an intresting article in this weeks Barrons (not exactly Mother Jones) on page 19 who's first two paragraphs are as follows: [/quote] A surge in government spending and persistently low intrest rates have revived the U.S. economy. The stock market has rebounded after a nasty fall. The dollar is weakening, gold prices are rising, and the federal deficit has balooned. Does this sound like the U.S. under George W. Bush? In fact, we're describing the state of the Union, or at least it's finances, under a previous White House tenant, Richard M. Nixon. But the eerie parallels point to similar policies, and suggest to some sage observers that the Bush administration's efforts to stimulate the economy will lead to similarly sorry ends. [/quote] I'm not going to transcribe the whole article, but the gist should be pretty clear. A very downbeat article from a magazine that would more often than not tend to be more closely alligned with the president.
Budget Gloom State by State By David S. Broder Sunday, November 16, 2003; Page B07 Washington has responded to the favorable turn in economic news with enthusiasm. When the third-quarter gross domestic product showed an annual growth rate of 7.2 percent and the monthly unemployment rate dropped from 6.1 to 6 percent, euphoria gripped the capital. Meanwhile, in the real world, the struggles of families, communities and whole states continue unabated. The celebrations and high-fives up and down Pennsylvania Avenue are not to be found beyond the Beltway. Let me take you on a tour of the country, thanks to my favorite Web site, Stateline.org, a nonpartisan scan of newspapers in all 50 states. This is a sampling, which you could duplicate in any week's news. Alaska is facing a budget deficit of' hundreds of millions of dollars. Dick Cattanach, executive director of the Associated General Contractors of Alaska, tells the Anchorage Daily News, "We have no hope of balancing the budget the way we are going." Arizona's Joint Legislative Budget Committee staff reports that "without smoke and mirrors, fund transfers and other gimmicks used to balance the 2004 budget, revenues for fiscal 2005 will be about $961 million less than anticipated spending," reports the Arizona Capitol Times. In California, the Associated Press reports that "to solve the state's budget problem and help pay for new school construction, voters may face a March ballot featuring more than $30 billion in proposed bonds -- by far the largest amount ever put forward on any statewide ballot." Meanwhile, doctors are suing to stop a 5 percent cut in reimbursements for services to 6.5 million Medicaid patients. The lawsuit says the new cut "is being imposed on a system already in crisis." And the state transportation commission says lower gas tax receipts mean a five-year moratorium on new highway or transit projects to relieve traffic congestion. In Connecticut, Republican Gov. John Rowland tells the AP, "We don't see the revenues to the state picking up until next year. We're not going to have any easy sailing budget-wise for at least two years." In Georgia, the health care program for the poor and disabled could run out of money in the spring, the Atlanta Journal-Constitution reports, "because $148 million was cut from the budget as part of an agreement to help balance the state's $16 billion spending plan." Already enacted cuts mean "removing thousands of low-income Georgians from the program and eliminating some benefits and services for others." In Illinois, a single day's news includes an increase in fares on Chicago Transit Authority trains and buses to erase a $30 million deficit, a 16 percent increase in tuition at the state university and a lawsuit challenging Democratic Gov. Rod Blagojevich's plan to take $125 million from a state-chartered environmental foundation to help balance the budget. He is also trying to sell the state's Chicago office building to raise cash. In Indiana, Democratic Gov. Joe Kernan led officials on a tour of prisons housing 23,000 people -- 7,000 over capacity. With the state facing a deficit of at least $810 million, the Indianapolis Star reports, two new prisons capable of holding 2,300 people cannot be opened because there is no money to pay for staff. In Iowa, the AP says Democratic Gov. Tom Vilsack is rescinding a $1.6 million cut in the Department of Public Safety because of his discomfort at learning "there are fewer troopers on the road than there were 30 years ago." Vilsack said he would have to cut elsewhere to make it up, but he could not say where. In Michigan, the AP says Democratic Gov. Jennifer Granholm is touring the state, seeking ideas about where to cut spending and deal with a $920 million shortfall. She is raising private money to pay her travel expenses. I am barely halfway through the alphabet -- but out of space. One more example. The Houston Chronicle reports that in President Bush's home state of Texas, 54,000 children have been dropped from the federal-state health insurance program under new regulations from Austin. This is just a sampling, but it suggests that the celebrations of economic recovery in Washington may be as premature as that "Mission Accomplished" banner hung behind Bush on the USS Abraham Lincoln to hail the end of major combat in Iraq. http://www.washingtonpost.com/wp-dyn/articles/A43076-2003Nov14.html
WOW! (btw, guess those here that suggested the early numbers were fictitious were in error) http://story.news.yahoo.com/news?tmpl=story&cid=668&e=3&u=/ap/20031125/ap_on_bi_go_ec_fi/economy U.S. GDP Grows at 8.2 Percent Pace in 3Q 1 hour, 2 minutes ago By JEANNINE AVERSA, Associated Press Writer WASHINGTON - The economy in the third quarter galloped ahead faster than an initial estimate, which was already the swiftest in nearly two decades. That burst, along with a surge in consumer confidence, raised hopes for the recovery's staying power. The broadest measure of the economy's performance, gross domestic product, increased at a 8.2 percent annual rate in the July-to-September quarter, even better than the 7.2 percent rate estimated a month ago, the Commerce Department (news - web sites) said Tuesday. The new GDP (news - web sites) reading — embraced by the Bush administration as proof of the effectiveness of its economic policies — represents the strongest growth since the first quarter of 1984, when the economy surged at a 9 percent pace. The new estimate is more than double the 3.3 percent rate in the second quarter. "I think the economy is back," declared an optimistic Mark Zandi, chief economist at Economy.com. "It has evolved from a very fragile recovery to a sustainable rebound." In other economic news, consumers' confidence in the economy climbed in November to the highest level in more than a year as people perceived the job market to be turning around, the Conference Board (news - web sites) reported. The private research group's consumer confidence index (news - web sites) rose to 91.7 in November, up from a revised 81.7 in October. "The surge in consumer confidence couldn't come at a better time," said Joel Naroff, president of Naroff Economic Advisors. "Households are becoming more confident about the labor markets and the future in general and that bodes well for this crucial holiday shopping season." Some analysts believe the economy is growing at a slower but still healthy rate of about 4 percent in the current October-to-December period, as some of the stimulus that helped in the third quarter — President Bush (news - web sites)'s third round of tax cuts and a wave of mortgage refinancing — fades. Sales of previously owned homes fell by 4.9 percent in October to a seasonally adjusted annual rate of 6.35 million, the National Association of Realtors said. But even with the decline, October's sales marked the third best month on record and were on track to set an all-time high for all of 2003. The main factors behind the upward revision to third-quarter GDP were stronger investment by business on new equipment and software, less severe cuts in companies' inventories and more brisk spending on residential projects. GDP measures the value of all goods and services produced within the United States. "The economy is regaining the confidence of businesses and they are stepping up to the plate and spending and investing for the future," said economist Ken Mayland, president of ClearView Economics. Treasury Secretary John Snow said the GDP report shows that the president's economic policies are moving the economy in the right direction. That's politically important to Bush as he heads into the 2004 re-election campaign. Democrats, however, blame Bush's poor handling of the economy for the loss of 2.3 million jobs since he took office in January 2001. In October, the unemployment rate improved fractionally, to 6 percent, as the economy added jobs for a third straight month. Steady improvements in job creation and in capital investment are crucial ingredients for the economic recovery to be sustained, economists said. Consumers, meanwhile, continue to do their part to keeping the economy going. They boosted spending in the third quarter at a 6.4 percent rate. That was up from a 3.8 pace in the second quarter, but down slightly from the 6.6 percent rate previously estimated. Especially encouraging was a 18.4 percent growth rate in business investment in new equipment and software in the third quarter. That was even stronger than the 15.4 percent pace previously estimated and up from 8.3 percent in the second quarter. Spending on residential projects grew at a whopping 22.7 percent pace in the third quarter, also better than the 20.4 percent first estimated and up from 6.6 percent in the second quarter. Fewer cuts to business inventories in the third quarter resulted in a 0.16 percentage-point increase to GDP in that three-month period, compared with a 0.67 percentage-point reduction to GDP as previously estimated. Another factor in the upward revision to GDP in the third quarter: Slightly stronger spending by state and local governments. These governmental bodies boosted spending at a 2.3 percent pace, up from a 1.3 percent growth rate previously estimated. ___
This is the second revision before the final numbers come out and we'll have to wait and see whether the real numbers out next month match the preliminary numbers released so far. I'm convinced the uptick is real, but we're still at a point where the macro numbers aren't matching what's happening on the micro scale... All of the following are from the last day or two... ______________ Sprint to lay off 2,000 KANSAS CITY, Mo. (AP) — Sprint (FON) will lay off 2,000 workers, or nearly 3% of its workforce, by the end of the year as part of an effort to cut operating expenses over the next three years. Sprint said Monday the job cuts will involve both its wireline and wireless (PCS) divisions. It employs about 70,000 people overall. The cuts are part of the Overland Park, Kan., telecommunications firm's reorganization around two market segments: business and residential customers. The company currently is organized according to products: local telephone services, long-distance voice and data services, and wireless. In September, Sprint announced its goal of reducing total operating expenses 5% to 7% — or more than $1 billion each year — over the next three years. Including the layoffs announced Monday, Sprint has cut more than 21,000 jobs in just over two years. In September, Sprint said it will use outside contractors to handle some software operations, affecting hundreds of jobs at the company. The company will announce later how much the job cuts will cost Sprint during the fourth quarter, company spokesman Mark Bonavia said. Both of Sprint's tracking stocks will record one-time charges. Sprint announced last month that it lost $498 million in the third quarter in contrast to a $519 million profit a year ago. Sprint said the loss reflected the consolidation of its two businesses, which are traded separately on the New York Stock Exchange. ____________ USA Today Overconfident investors get a good scare Investors are now paying for the months of exciting market gains they've enjoyed. Stocks fell for the second consecutive week, this time by 1.4%. That's a shock for investors who haven't seen the market fall two weeks in a row in more than three months. Even more worrisome: The software industry group, which had been leading the market, is now trailing. Meanwhile, industry groups that tend to do best when the economy slows, such as consumer goods and food & beverage, are not only beating the market but are gaining on semiconductors. But overconfident investors needed a good scare, and the 12% jump in the fear gauge this week shows that many of them got exactly that. ___________ Existing home sales cool, peak may have passed WASHINGTON (Reuters) — The market for existing homes cooled in Ocotober, as sales fell a larger-than-expected 4.9%, the National Association of Realtors said Tuesday. Sales of previously owned houses slid to a 6.35 million annual seasonally adjusted rate. Analysts had been projecting sales to fall, but only to a 6.53 million annual rate. September sales were revised to a 6.68 million annual rate from the initially reported record-setting 6.69 million. "It does appear we might have seen the peak for housing activity," said NAR Chief Economist David Lereah. Still, Lereah said sales were on track to set an annual record at more than six million homes in 2003. Home mortgage rates, having bounced above four-decade lows seen earlier this year, remain a relatively low levels. According to housing finance giant Freddie Mac, the average rate on a 30-year fixed-rate loan was 5.95% in October, down from 6.15% in September. Sales were down in all four regions of the country, NAR said. Purchases fell 2.7% in the Northeast, 9.2% in the West and 4.9% in the Midwest. In the South, the largest market for home sales, purchases dropped 2.7%. The inventory of homes on the market rose in October to 4.6 months' supply — highest level since July — from 4.3 months' supply in September. The median home price rose to $172,400 from $171,800. Median sales prices - half cost more, half cost less - are not adjusted for seasonal variation. _______________ Holiday spending may disappoint, survey says WASHINGTON (Reuters) — The holiday shopping season may not live up to economists' robust expectations, a survey out Tuesday suggests — more Americans say they will cut spending from last year's already weak levels. A surprisingly pessimistic survey from the Consumer Federation of America and the Credit Union National Association says consumers are cautious because of lingering concern about the economy and worries about household debt. (Related audio: Credit Union National Association's Bill Hampel says he's not looking for spending surge) Most private-sector economists have predicted strong U.S. holiday spending, fueled by leftover cash from summer tax cuts and renewed confidence in the economic recovery. But 34% of consumers surveyed said they would spend less during the holidays than they did in 2002, a big jump from the 21% who said so last year. The survey of 1,017 adults was conducted from Nov. 13 to Nov. 16. Only 15% planned to shell out more — down slightly from 16% a year ago — while the percentage of people who said they would spend about the same amount fell to 50% from 61%. "This is a surprising result," said Bill Hampel, chief economist at the Credit Union National Association, noting that until he got the survey results a week ago he, too, had been expecting a surge in holiday spending. "But this survey tells us that consumers are still more nervous about the economy than we might have expected. Their confidence in the recovering economy is lagging the actual growth in the economy." Last year's holiday shopping season gave retailers little enough to cheer about. The sector logged its smallest sales growth in more than 30 years. Hampel said since the annual survey is not adjusted for the amount of money consumers expect to spend, holiday sales could still rise this year. But he warned high expectations for a booming retail season may be too optimistic. "I don't expect holiday spending to shrink this year, but I do expect us to have much weaker holiday spending than some analysts are expecting," he said. Household spending has risen about 3% a year in the last four years despite the 2001 recession and slow economic recovery, he said. Consumer Federation executive director Stephen Brobeck said continued concerns about meeting debt payments seemed a key factor behind the restrained spending plans. Asked what they would do with a $5,000 windfall, 46% of those surveyed said they would use most of it to pay down debt, up from 40% last year. Only 15% said they would spend it, while 37% would add the money to savings or investments.
