Report shows U.S. economy rebounding

i think jobs are ultimately a product of performance among the other variables...like consumer spending.

 

oh i agree

but until we see job growth...all those other things don't mean a thing to the millions of college educated people that can not find jobs...

it has been almost 2 years since the so called "end of the recession"

there comes a point where real results that matter and directly effect people (voters) are what is important...

While Bush&Co. are off spending billions and billions fighting a ficticious war, real Americans are struggling without seeing much hope..

 

to quote Homer after the chiropractor adjusted him

it's a little better

 

I see that no one has dared touch my fact-based analysis regarding the 7 indicators for the economy. The economy *is* rebounding.

The truth hurts, liberals.

 

I have trouble feeling sorry for college students. They may "struggle" now by living with the 'rents but it's not exactly like going on welfare and getting a cashier's job. I got laid off 1 year into my first job out of college, but 2 months later I was able to find a job. It was hardly a struggle for me. People who are in college probably aren't going to start selling crack or robbing convenience stores.

 

Rose-colored glasses Jorge. We got run over by a truck and now that our broken leg is mending we should ignore the fact that we're paralyzed from the waist down? I want to be optimistic, but there's also a place for realism. While some things are thankfully looking up (that's a relative term) things didn't have to get this bad in the first place.

Went to check out your source, and here's the lead story on the site. Interesting quote in the last paragraph.
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Economic speed bumps ahead
The economy's clearly accelerating in the third quarter, but the road ahead is far from smooth.
September 2, 2003: 12:44 PM EDT
By Mark Gongloff, CNN/Money Staff Writer



NEW YORK (CNN/Money) - U.S. workers returned to the job Tuesday in an economy clearly stronger than it was in the spring and summer, and economists have high hopes the rebound will accelerate through the winter into 2004 and beyond.

But many economists believe that, after the impact of recent tax cuts and child-tax credit checks pass through the economy, there are several speed bumps on the road to a long-lasting rebound. Though it seems doubtful these jolts would trigger another recession, they could mean that 2004 ends up looking a lot like 2002 and 2003, with stretches of sluggish growth.

Labor-market pain
Though unemployment, which clocked in at 6.2 percent in July, never got as bad as it did in prior recessions, it's also the worst in nine years, and it seems unlikely to fall significantly for several months -- economists surveyed by the Philadelphia Federal Reserve believe it will average 5.9 percent in 2004.

In addition to making people nervous, a lousy labor market keeps a lid on wage growth, and some economists worry it will persuade consumers to keep a lid on their spending, which makes up more than two-thirds of the economy.

"While employment is a lagging indicator, the economy does need to start generating new employment over the next few months or consumer confidence and spending could suffer," Richard Nash, chief market strategist at Victory Capital Management, said recently.

Higher interest rates
Since bottoming out at 3.07 percent in mid-June, the yield on the 10-year Treasury note has exploded to 4.54 percent, one of the most dramatic swings in bond-market history, triggering a similar jump in 30-year mortgage rates.

Though bond yields could fall again -- especially since the Federal Reserve has promised to keep short-term rates low for a long time -- their recent jump might already have done damage to economic growth in 2004 by killing the refinancing boom and setting the housing market up for a slowdown.

"The increase in long-term interest rates is likely to subtract about one percentage point from real GDP growth," Goldman Sachs economist Jan Hatzius said in a research note earlier this month. "Although this will not prevent the economy from accelerating in the second half of 2003, it is likely to push growth back down to a below-trend pace in 2004."

Rising deficits, debt
Interest rates also could be pushed higher by a surging federal budget deficit. If the government issues more debt when there's high demand for other kinds of debt, such as corporate bonds, then yields must rise to compete for investors' attention.

Also worrisome to some economists is the ever-enormous budget and current account deficits, which measures the flow of goods, services and money between the United States and other economies. By running this deficit, America is basically borrowing money from the rest of the world, in the form of about $2 billion of foreign investment every day.

Worries about these "twin deficits" have never really amounted to much, but the fear is that sluggishness in the U.S. economy could sap overseas investors' appetites for U.S. assets, causing stock prices to fall and interest rates to rise. Though the dollar's value also would sink, helping exporters sell goods overseas, the other effects of a current account correction would hurt the economy.

Many economists also worry about the debt burden of households and businesses. Though low interest rates and rising wages have eased the sting of debt payments, the ratio of corporate and household debt to GDP is still near a record high, as is the percentage of household disposable income spent on debt service, and private-sector debt was 180 percent of GDP in the first quarter of 2003.

"The U.S. cannot increase private sector debt indefinitely. It cannot increase government debt indefinitely. And it cannot increase external debt indefinitely," UBS Warburg chief global economist George Magnus wrote recently. "A U.S.-led global expansion is ... doomed to end at some stage, even if the dollar resumes its downward trend during the course of next year."

Security
"Geopolitical uncertainty" in advance of the U.S.-led war with Iraq earlier this year helped fuel a dramatic economic slowdown. Though some of the worst worries about the war never came to pass, the world is still an uncertain place, with post-war Iraq and Afghanistan still unsettled, the Israeli-Palestinian struggle far from resolution and North Korea and Iran apparently rushing to make nuclear weapons.

The costs associated with these troubles, along with increased money spent on security -- both physical and digital -- may show up only on the margins, adding a bit to corporate costs and draining money from the private sector to the government.

But another major terror attack, on or near the scale of the Sept. 11 attacks, would likely devastate the U.S. and global economies, and another war could have a similar effect.

Energy
Fed Chairman Alan Greenspan warned earlier this year about the potential economic harm done by higher natural gas prices. The supply shortages that pushed prices higher in the summer could become much more damaging as the United States moves into winter, when natural gas demand rises.

Oil prices also have remained stubbornly high, due in part to an inability to get Iraq's oil production back up to speed, along with other supply issues in places such as Venezuela and Nigeria.

Higher energy prices act as a sort of tax on households and businesses, taking money away from potential discretionary spending and business expansion.

"We have very high energy costs, rising mortgage rates, reduced tax stimulus and no sign of what we really need to be convinced that the economy is on the precipice of a self-sustaining multi-quarter trend of above-potential growth, otherwise known as employment growth," said David Rosenberg, chief North American economist at Merrill Lynch.
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Here's another featured story from the site:




Labor woes to linger
The longest job slump since World War II may be nearing an end, but jobs still are tough to come by.
August 29, 2003: 12:27 PM EDT
By Mark Gongloff, CNN/Money Staff Writer

NEW YORK (CNN/Money) - By most lights the economy has recovered smartly from this spring's downturn, but every bit of good news that crosses the wire these days is probably met with a resounding "So what?" from the 9 million Americans without jobs.

Unfortunately, despite the pickup in economic growth, those who are unemployed aren't going to see many new jobs any time soon, according to many economists.

Thursday's data were the latest in a trend -- the Commerce Department said gross domestic product (GDP), the broadest gauge of economic health, grew at a 3.1 percent annual rate in the second quarter, faster than expected, even as the Labor Department reported a slight rise in weekly unemployment claims.

"Despite the healthier economic outlook, the Achilles heel of the economy is a lack of jobs," said Sung Won Sohn, chief economist at Wells Fargo & Co.

Most economists think GDP growth will accelerate in the second half of 2003, approaching 5 percent, according to some forecasts, before settling into a cruising speed of about 3.7 percent in 2004, according to the average forecasts of 30 economists surveyed by the Philadelphia Federal Reserve.

In most recoveries, such growth spurs job creation. But it doesn't just happen overnight, since companies first must become confident of the recovery, then take time to seek and interview job applicants.

Bank One senior economist Peter Glassman said he expects job creation in "the next several quarters," but he echoed the Philly Fed's consensus estimate that the unemployment rate would average 5.9 percent in 2004, only slightly lower than July's rate of 6.2 percent.

"We don't think the unemployment rate will be any lower than 5.5 percent by the 2004 election," Glassman said.

Signs hopeful, not so hopeful
Still, there have been good signs for the job market of late, most notably the fact that weekly jobless claims in five of the past six weeks have been below 400,000, the usual benchmark for labor-market weakness.

But claims haven't been that far below 400,000 -- the most recent four-week average is 396,250 -- and they've been skewed in July and much of August by summer shutdowns in the automobile and other industries.

"[The] jobless claims report indicates we still aren't seeing much evidence that the jobs picture is brightening," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

Meanwhile, small businesses, often the first to hire in a job market rebound, still have little room for new workers, according to a recent survey of 1,160 businesses by the National Federation of Independent Business. Even after cutting their payrolls in 28 of the past 30 months, only 15 percent of small firms said they had jobs that were hard to fill, the lowest percentage since 1993.

The good news is that bigger businesses have added 122,000 temporary workers in the past three months, the strongest such period since the Labor Department started keeping track in 1990. Companies often use temps to meet increased demand in an upturn, just before they hire permanent workers again.

But Scott Brown, chief economist at Raymond James & Associates, said in a recent research note that companies could be hiring temps just to avoid rising health-care costs.

What's more, employers have learned to squeeze more work out of fewer workers. Productivity, the measure of output per worker hour, grew in 2002 at the fastest pace since 1950.

"With such rapid gains in productivity, GDP growth may need to be 4 percent or so to be consistent with even moderate job growth," Brown told CNN/Money.

Economy shifts gears
And some of the jobs lost in recent years have gone to places such as China, India and the Philippines, where labor and benefit costs are cheaper. This is an old story for manufacturing, but now other industries -- including services such as health care, architecture and accounting -- also are jumping ship.

Still, manufacturing has borne the brunt of the labor market pain, losing 2.3 million of the 2.7 million total jobs lost since March 2001. Many of those jobs are unlikely to return as the U.S. economy shifts further from manufacturing to services, forcing many workers to seek greener pastures.

"The manufacturing sector will continue to shed jobs for the foreseeable future," Wachovia Securities analyst Matthew Ellis wrote in a recent research note, citing a "structural change, not just a cyclical downturn" in the industry.

Ellis's sentiment was echoed by a New York Fed study this week pointing to structural causes of the long "jobless" recovery from the 2001 recession.

"Industries that lost jobs during the recession have continued to shrink during the recovery, and permanent job losses have eclipsed temporary layoffs," Fed economists Erica Groshen and Simon Potter wrote.

Broader economy at risk?
Many analysts worry the labor market's pain threatens the broader economy, since it may cause consumers to curb their spending, which fuels two-thirds of the world's largest economy.

But it takes an awful lot to keep consumers from spending. Despite a recession, terrorist attacks, a three-year bear market in stocks, corporate scandals and two wars, they still have managed to keep it together long enough to buy new cars, houses and TVs.

Rather than a consumer-driven recession, many economists think the most likely scenario is more of the same -- a stop-and-start economy with a labor market that's not bleeding jobs, but is still a long way from total health.

"The economy has been so resilient to all these shocks, we would have to have widespread job loss to get a recession, and I don't see that happening," said Richard Yamarone, chief economist at Argus Research. "But I think we will have a trickling of jobs in and out. That could lead to weaker economic growth than we anticipate."
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I dont have to hope or wish

the facts are that is the way things are now for college grads..

you can dismiss it, try to explain it away all you want, chaulk it up to the stupid names you always spew...Do you EVER think anyone has any real concerns that have nothing to do with bush bashing or being a liberal? Can you take off the blinders for a second?

but when the facts are that there are not a whole lot of jobs out there for college grads..no amount of "economic indicators" help.

I have a wife and kids..I went to college to give myself the opportunity to give them a better life..im sorry but living with my parents isnt an option, working as a cashier isnt an option...

you can talk down to me, dismiss me whatever the f you want..

but the truth is, if everything was a rosey as you try to paint it, you wouldnt have the need to post abstract indicators that mean zero on here and call people childish names

T_J, you yourself said "show signs of " that is hardly a screaming decleration of recoverey, I am interested in results, not something that might be or might not be showing signs of...the recession supposally ended 2 YEARS AGO

look at Major's lil graph there, it shows payrolls are still SHRINKING 20 months into so called recovery

 

The liberals continue to focus on the *one* indicator that is negative -- the lagging indicator no less. Maynard, you can get profane with me all you want, but it does not change the fact that Bush's fiscal policy and Greenspan's accommodative monetary policy have helped turn around a shallow recession caused by the stock market bubble bursting (March 2000), 9-11, a necessary war in Afghanistan, a necessary war in Iraq, and corporate scandals. We are coming back and coming back strong. This is good news for all Americans who want the economy to improve. It is sad that this does not include liberals who prioritze political gain over the welfare of hard working citizens.

The market recognizes that the economy is rebounding -- we have been hitting new yearly highs for a week or so.

 

Where do you come up with this nonsense? It is like you don't even read what I say..cuz you make up what you want to hear..

I ask you, where have I said that I don't want things to get better???

I thought that I was pretty clear in stating that things ARE NOT GETTING BETTER FOR HARD WORKING CITIZENS, especially THIS one..

Just b/c I say they things not getting better, doesnt mean that I HOPE they don't get better..


Im sorry, but nothing Bush has done has helped me

 

I am truly sorry that you are currently unemployed, but claiming Bush is responsible for your predicament is a bit ridiculous. You are very wrong with your last statement. Bush's tax relief has spurred consumer spending, as cited in my post in this thread. This has helped the economy, of which you are a participant. What kind of world do we live in when we are blaming the President for our career path? Sad.

 

I wonder what the average is for T_J to say the word "liberal" is per post?

who says it more? T_J or BigTexxx?

 

I never said I was unemployed

I never blamed the president for my career path

 

One thing we've learned from Democrats- if the economy is going well, it doesn't matter if you lie.

 

and

These statements, when read together and combined with the general intellectual level of your commentary, led me to believe you were out of a job. Your last statement led me to believe you were blaming your unemployment on Bush.

 

Here's my take for what it's worth;

The bubble market of the 1990's was preciptated from market values being wildly inflated by the irrational hope that companies could build growth at a rate that any reasonable person should have known was impossible.

This apparent market recovery is the result of the United States government flooding the markets with money through deficit spending and cheap credit. In the wake of 911 I don't see that they have a lot of choice. But does anyone think the deficit rate is sustainable? If not where will the profits come from? Most companies that are growing income are doing through cutting costs. That can't go on forever either. So soon companies are going to have to find a way to produce real profit growth and about when they do, then interest rates will begin to rise ( stocks will look more desirable makeing Treasuries less desiable) making it harder for them to actually earn profit.

The only way out is to settle for slow growth for the long haul.
That means cutting deficit spending, prioritizing our money, spending first things we need to preserve our way of life. For me that is domestic defense, child health care,a reasonable safety net for those who can't work, public works that benefit our enviroment. No corprate welfare, no foriegn military support, no BS pork. Just what you should do when your family is on hard times.

 

The economic rebound continues to gain strength. More encouraging economic news:

Fed's Regional Survey Finds
Improvement in the Economy

By GREG IP
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- The economic recovery is broadening with tentative signs of a stabilizing job market, a survey by the Federal Reserve found. But Fed officials, though encouraged, aren't likely to see it as sufficient proof the economy is out of the woods.

"The economy continued to improve in July and August," the Fed's so-called beige book, an anecdotal survey of business conditions in its 12 regional districts, said. Eleven of 12 districts said conditions improved, although in some the improvement was only "selective."

The beige book is used to help Federal Reserve policy makers decide on what, if any, actions to take on interest rates. They next meet Sept. 16. Despite their growing confidence in the economic pickup, they are likely to keep their target for the federal funds rate at 1% and signal continued willingness to leave it there for some time. That's because inflation is already as low as most policy makers want to see it go and there's some risk of it going lower.

Business contacts told the Fed that manufacturers' capital spending plans remained "cautious". The job front was more encouraging. Though job markets "remain slack across the nation," manufacturing labor demand was "firming." In the Boston district, "a few companies that had considered layoffs in the first quarter have, in fact, begun to hire." Temporary employment firms also reported a rising demand.

But these encouraging signs have not translated into inflationary pressure. "Most product prices are reported to be stable or lower," the report found. Several Fed officials have warned that while the economy may be recovering, there is so much slack in the economy that underlying inflation, already about 1%, could drop further. If the economy were to stumble again, it could come close to zero and even become deflation, or falling prices. This is one reason the Fed has indicated it will keep rates low for a "considerable" period.

In spite of that, investors have sharply pushed up long-term interest rates and expect the Fed to start raising rates as soon as April. Wednesday, Federal Reserve Bank of San Francisco president Robert Parry said there was a "disconnect" between his and the market's view of rising inflationary pressure and tighter monetary policy. "I'm certainly a big believer in markets, but at this point, I guess I see the situation a little differently." He said even if the economy does better than expected, that's not much of a concern because "we're likely to have a considerable amount of excess capacity for some time to come."

Separately, spending on construction ventures around the country increased in July to the highest level seen since the beginning of the year, a promising sign for the economy's expected second-half rebound.

The month's increase of 0.2% represented a seasonally adjusted annual rate of $879.83 billion, the Commerce Department said Wednesday. The report showed strength in private building and residential construction, but public construction spending fell.

Although July's increase wasn't as big as the 0.5% rise that economists were predicting, June's performance turned out even better than the government previously estimated. Revised figures show that construction spending rose by a brisk 0.7% in June from May, compared with the 0.3% advance first estimated. The report didn't explain the revision.

The $879.8 billion pace of construction spending in July marked the highest level since January, when such spending stood at $883.2 billion on an annualized basis.