Posted on NASDAQ at 1:26 today...Economy Shows More Signs of Losing Steam And the Clinton spinteam is out full force this AM....They don't want Clinton to take any blame for the last year or two slowing of the economy....And certainly don't want Bush and Cheney to say anything that sounds like laying responsibility on the shoulders it belongs on.... Have listed in BOLD points to ponder, and used italics for Propaganda....
By Glenn Somerville
WASHINGTON (Reuters) - New government figures on Thursday showed U.S.
economic
growth slowed sharply in the summer to its weakest pace in four years as a political
debate
about the risks of recession heated up.
The Commerce Department said gross domestic product or GDP, the broadest
measure of
economic activity within U.S. borders, grew at a revised 2.2 percent rate in the
July-September
third quarter.
That was marked down from 2.4 percent that the government estimated a month ago
because
overseas sales were weaker than it thought then. It was the most lackluster quarterly
growth
since 2 percent in the third quarter of 1996 and followed a sparkling 5.6 percent rate
of
second-quarter expansion.
Other reports showing rising claims for jobless pay and slumping manufacturing
activity along the
East Coast added to signs that economic boom times were over and fanned a war of
words
about how serious the slowdown may become.
Senior Clinton administration officials angrily charged that top members of
President-elect
George W. Bush's team were ''talking down'' the economy in a campaign for tax cuts
that could
backfire by spreading self-fulfilling fears of a sharp slump.
``What you're seeing is President-elect Bush and his team actually talking down our
economy,
actually probably injecting more fear and anxiety into the economy than is justified,''
said Gene
Sperling, a White House economic adviser.
REALISM, OR SCARE-MONGERING?
But Vice President-elect Dick Cheney said later the incoming Bush administration,
which will
take power in January, had to be realistic. Bush campaigned on a program of
offering a
$1.3-trillion tax cut to fuel U.S. prosperity.
``There does seem to be a lot of evidence out there that in fact the economy has
slowed down
some,'' Cheney said in a meeting with reporters. ``Whether or not this ultimately
results in a
recession, that is negative real growth, nobody knows at this time.''
The economy has grown steadily since the last brief recession in 1990-91, creating
tens of
millions of jobs that the Clinton administration wants full credit for while ensuring that
any future
weakening is laid on the doorstep of the incoming Bush administration.
The rapidity of the slowdown in national output is raising concern among the highest
councils of
economic policymakers. The Federal Reserve -- the U.S. central bank -- this week
said it was
more concerned now about an excessive downturn than about inflation as it signaled
it was
preparing to cut interest rates in the new year.
The Labor Department said on Thursday that new claims for unemployment pay
jumped by
34,000 last week to 354,000. In some states, layoffs were beginning to show up in
the auto
industry, a reflection of slumping sales as carmakers shutter plants temporarily.
BRAKES ARE
STILL ON FOR ECONOMY
The slowing appears to be continuing.
The regional Federal Reserve Bank of Philadelphia said manufacturing activity in the
U.S.
mid-Atlantic region contracted in December -- a third bleak month after sluggish
growth in
November and another contraction in October.
Its index of business conditions, calculated by subtracting companies that report
decreases in
particular measures like prices and orders from those that have increases and making
seasonal
adjustments, fell 6.1 after rising 5.2 in November.
Economist Paul Kasriel of Northern Trust Co. in Chicago said rising jobless claims
and the
continuing weakening in manufacturing clearly reflect an economy under stress after
years of
breakneck borrowing and spending.
``It's almost like we're on a knife-edge,'' Kasriel said, made especially so because of
high levels
of consumer debt and corporate borrowing for expansion and for share buybacks.
``Right now, there is no sign of recession, but conditions could deteriorate very
quickly, he said,
adding that he still was forecasting GDP growth around a 3 percent rate in the
closing quarter
this year, slowing to 2.5 percent in the first half of 1991.
Financial markets, while still jittery about the economy's direction, regained some
equilibrium on
Thursday. Both the Dow Jones industrial average and the high tech-laden Nasdaq
composite
index held strong gains at noon.
Bond prices were off as money shifted to equities but yields remained low by
historical standards
after recent big inflows of money from wary stock-market investors.
The rate of price rises slowed during the third quarter, as the personal consumption
expenditure
gauge favored by Fed Chairman Alan Greenspan advanced at a revised annual rate
of 1.8
percent. A month ago, Commerce had estimated prices went up at a 2.1 percent
rate, the same
as in the second quarter.
Corporate profits suffered as the economy slowed in the third quarter.
After-tax profits totaled $654.4 billion and grew at only a 0.6 percent annual rate,
the weakest
performance since the closing quarter of 1998 when they contracted amid a global
slowdown
stemming from an Asian financial crisis. Profits had grown at a 2.5 percent rate
during the second
quarter.
Reut13:26 12-21-00
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