Econ--"Basis Points" by John M. Berry, The Post..
washingtonpost.com
--------------------------------
Edited for ease of reading.
>>> Basis Points
By John M. Berry
Sunday , July 30, 2000 ; H02
On Friday, the Commerce Department shocked a lot of investors and analysts by reporting that the economy grew at a 5.2 percent annual rate in the second quarter, well above what anyone had expected.
Consumer spending rose at a 3 percent rate, less than half its gain in the two previous quarters, just as predicted. But business investment soared and government spending was up significantly.
Even though virtually all the added production was supplied by productivity improvements rather than more hours worked, the report might be taken by Federal Reserve officials as evidence that economic growth remains too rapid for safety in terms of inflation.
On the other hand, the officials clearly are much more concerned about rapid increases in consumer spending than in business investment, which will make the economy more efficient in coming years.
This week's report on July labor-market conditions may provide further evidence of what is going on in the continuously surprising American economy.
Tomorrow, the Treasury will sell $9.5 billion in three-month bills and $8.5 billion in six-month bills, which yielded 6.25 percent and 6.34 percent in when-issued trading Friday. On Wednesday, the Treasury will announce its financing plans for the rest of the year, including whether it is eliminating any of its current auction schedule.
© 2000 The Washington Post Company <<< |
