Seriously, Pat...I hear you berating President Bush with every sentence you write, and any of the Administration you can find....And yet, I haven't heard one time what YOU personally would do if you were President.
What would YOU do about Sept 11th~~ the murderers, and the people who funded them?
How would you protect Americans?
What would YOU do about the economy (which according to these economists started in the 3rd quarter 1999?
What would YOU do about education and the fact Nationally we have spent close to $150Billion more and yet 50%!!!!!! of our children can't pass required tests?
I posted this yesterday, yet you made no comment about the date of the program ~~March 2001~~, nor the fact that the economic slump they were talking about started in the 3rd and 4th quarter 1999!!!
Maybe the rich democrats really do think or feel they are superior, and want to keep the ordinary man and woman ....well.....ordinary.
Note the date: ECONOMIC DOWNTURN
March 13, 2001
pbs.org
The markets regained some ground today, but economic news continued to
be gloomy. Jim Lehrer leads a discussion about the nagging signs of a
slowing economy.
Online Special: Layoffs.com -- The downsizing of the online news industry
RealAudio: Two experts discuss how faltering dot-com companies are affecting
the Nasdaq:
March 12, 2001: The once high-flying dot-com industry is quickly falling on
hard times.
Jan. 25. 2001
Gearing down
Jan. 11. 2001
Economic forecast
Jan. 3. 2001
The Fed unexpectedly reduces interest rates
Dec. 19, 2000
The Fed signals recession, not inflation, may be the biggest threat to the
economy.
Dec. 6, 2000
Why does Greenspan have so much control over markets?
Nov. 15, 2000
This year's election and the stock market.
Oct. 18, 2000
What is behind the market's recent ups and downs?
April 14, 2000::
Market analysts provide insight into point loss for the Dow and NASDAQ
markets.
March 10, 2000::
The NASDAQ breaks the 5,000 barrier.
February 25, 2000:
What is the cause of the NASDAQ/Dow trade-off?
February 1, 2000:
The cultural impact of the new economic boom
January 13, 2000:
Is the current boom a "new" economy?
January 7, 2000:
Today's unemployment figures and their meaning for the economy.
January 4, 2000:
Fed Chairman Alan Greenspan accepts re-nomination.
December 30, 1999:
A look back at the meteoric stock jump of 1999.
November 26, 1999: Can the red-hot economy stay warm during the holiday
season?
October 15, 1999: The increasingly volatile Dow Jones average.
October 14, 1999: One town struggles to keep up with the economic boom.
September 27, 1999: A report and discussion from the annual IMF/World Bank
meeting.
August 24, 1999: Should the stock boom bring another interest rate raise?
July 7, 1999: Online salesmen like Amazon.com are changing the way we do
business.
July 7, 1999: A new study says the Internet is changing our economy even
more than we think..
JIM LEHRER: The economy is our lead story tonight. The markets were
back up today, but economic news continued to be gloomy, today's example
bring a report that retail sales were lower than expected last month. We
look at what's happening now through the eyes of four regional economists:
Joel Naroff is chief economist for Commerce Bank in Cherry Hill, New Jersey;
Mark Vitner is vice president and economist at First Union Corporation in
Charlotte, North Carolina; Paul Sommers is an economist and senior research
fellow at the University of Washington, in Seattle; and Diane Swonk is chief
economist and senior vice president at Bank One Corporation in Chicago.
First let's just go around quickly to get an overview from each of
you, starting with you, Mr. Naroff. Describe the situation in the
Northeast: How is this downturn being felt in general terms?
JOEL NAROFF: Well there's some slowdown already, but it isn't really
great. What happened in the Northeast was to a very large extent that we
didn't have any major expansion. We didn't grow excessively fast during most
of this growth recession in the '90s. As a result, we have a slowdown but
not as great. Part of that is because we are not nearly as dependent on
manufacturing. And this is largely a manufacturing recession right now.
JIM LEHRER: Sure. Mr. Sommers, the view from the West, the overview
from the West.
PAUL SOMMERS: Our high tech economy is slowing down significantly.
Software and computers and computer parts have all slowed down in response
to the lower value of the NASDAQ and slow growth or cutbacks among major
customers for these companies.
JIM LEHRER: And that's having a ripple effect?
PAUL SOMMERS: Oh, very definitely. You can see that in housing starts, for
example, in this state, and just an unwillingness now of investors to put
money into new start-ups which are hanging around on the fringes trying to
get in, trying to establish some companies for the future.
JIM LEHRER: Ms. Swonk in Chicago, what does it look like in the
Midwest?
DIANE SWONK: Well, you know, I think downturn is a wrong word for it. It
certainly is a slowdown. But I'm in the heart of where the economic malaise
is supposed to be the worst. And you'd be hard pressed to find a consumer on
the street that's not still spending. Putting those spending figures into
context today too they came on the heels of the doubling of the pace of
spending in January and so on net many people are revising up their views of
GDP growth in the first quarter because consumers are actually spending more
than they thought particularly on vehicles, very important to the Midwest.
We've seen production decline to drain inventories. But now the automakers
are talking about an increase in production in the second quarter so we're
at an inflection point where we're almost going to see this weakness turn to
strength as production comes back along with consumer spending.
Slowdown or downturn?
JIM LEHRER: So downturn is not in your vocabulary.
DIANE SWONK: Not at all. I think a slowdown is certainly well within all of
our vocabulary. But listen to what we're talking about now. A slowdown is
different than a downturn. We were an economy going at 110 miles an hour
a year ago. We've slowed down to 40 miles per hour. It seems like we've
stopped but we're still moving slowly forward. And I think we're going to
reaccelerate well above 60 miles an hour, even higher before the year is
over.
JIM LEHRER: Okay. Mr. Vitner, in the South, is it a slowdown? Is it a
downturn? If not one of those two, what is it?
MARK VITNER: Well, it's definitely a slowdown. We're taking some lumps
but overall the South is still growing slightly faster than the nation.
We've got an unemployment rate that's averaging about 3.8 percent and job
growth is still better than 2 percent. But at the same time, the
manufacturing sector in the South, which is rather large, particularly in
non-durable goods industries, has taken a lot of hits. North Carolina
actually leads the nation in manufacturing job losses with a loss of about
25,000 jobs over the last year. We've also seen some trouble in the tech
sector. Atlanta actually added the most high-tech jobs during the 1990s of
any city in the country. And it's seen quite a slowdown recently and tech
companies have given back about 4 million square feet of office space back
to the sublet market because they took out leases on this space thinking
they were going to need it or grow into it. Now they're actually moving the
other way.
JIM LEHRER: Let's go back around again and begin with you Mr. Naroff, what
is all this talk of slowdown, of downturn or whatever? What's the psychology
at work here -- as you read it?
JOEL NAROFF: Some of the business people have become a little bit more
cautious, but in this area again we have a whole lot of situations where,
for example, in commercial real estate, vacancy rates are in the single
digits. It's hard to find space; in a state like Connecticut, the
unemployment rate is in the 2 percent range and it's hard to find people
even now. Consumers are a little cautious. Businesses are hearing that it's
a major problem, but they're really not cutting back dramatically at all. I
think the idea's that they're hearing more than they're seeing as I think
others have commented, and that's grated a caution but it hasn't created
major reaction at least at this point.
JIM LEHRER: Mr. Sommers, in your part of the world, are they hearing more
than they're seeing, or what's the situation?
PAUL SOMMERS: I think slight caution is the right metaphor to be using here.
We still have a software industry that seems to be expanding. Boeing has
stabilized. That's a very, very good thing for this state. There's some
trouble spots in agriculture and forest products. But those are the only
places where you really see cutbacks in this state. So, overall, I think
there's still a lot of strength and people are bearing up under that.
JIM LEHRER: And Ms. Swonk, you said earlier that people are still buying in
the Midwest, right?
DIANE SWONK: Actions speak louder than words. And I think one of the
things that's important to look at is even though overall consumer
confidence has deteriorated in recent months there's a real dichotomy which
Alan Greenspan has referred to, the difference between how people feel about
their own backyard, their own wallets and how they feel about their
expectations about the future. Their expectations about the future have
deteriorated quite sharply mostly related to negative news regarding the
economy. Their own current financial situations, thought, have held up
relatively strong. They're well within expansion territory. And it sort of
goes back to something I always live by: Never bet against a consumer who
has got money in their pocket to burn.
JIM LEHRER: Okay. Tell us about the consumers in the South, Mr. Vitner.
MARK VITNER: Well, the consumers in the South seem to be holding up very
well. Home sales are close to a record level across the Southeast. The
southern United States accounts for half of all the new homes that are built
in the country. And this year has gotten off to a strong start. The tourism
industry in Florida has been doing remarkably well. In fact, some of the
problems that hit the U.S. economy actually were a benefit to Florida
because when it turned real cold in the rest of the country, the economy
tended to turn down but that also caused a lot of tourists to head to
Florida. But I don't want to come across as saying that, you know, that
there's the all-clear signal out there. We still think that the economic
growth is going to be relatively sluggish throughout most of this year. It's
not just an inventory problem that we're facing. There is a severe
overcapacity in the high-tech sector that's going to take some time to be
worked off. When we get the inventory numbers tomorrow, we get manufacturing
and wholesale and retail inventories tomorrow, retail inventories will have
dropped, wholesale inventories will have dropped but manufacturing
inventories have increased. And they're going to continue to be a problem.
So I don't know that we're going to move past this trouble in the
manufacturing sector in the next couple of months. It's likely to linger
through the summer.
High-tech effects
JIM LEHRER: You mentioned it earlier and we talked about it here on this
program last night -- what's happening in the high- tech area. Is that
having a measurable effect in your area, Mr. Vitner?
MARK VITNER: Yes, it is.
JIM LEHRER: You mentioned Atlanta. Is there anything beyond that?
MARK VITNER: Well, the Raleigh Durham area -- I just got back from
visiting with clients up there. That's a major high-tech center. IBM has put
expansion plans on hold. Cisco is cutting back. Nortell is cutting back. The
Washington, DC area has also seen a number of lay-offs. That's the biggest
high-tech center in the country is actually the Washington, DC area, which
is basically the birthplace of the Internet. And they are seeing a lot of
cutbacks there as well. So I think it's too soon to say we're out of the
woods yet but I do think that we will see some improvement on the consumer
side before we see some improvement in the high- tech sector.
JIM LEHRER: Ms. Swonk, yes.
DIANE SWONK: I just wanted to add on the high tech side that people don't
think of the Midwest on the high tech side, but the silver lining to the
NASDAQ collapse and the misallocation of capital to the dot-com frenzy was a
fairy tale -- as Warren Buffet puts it - I think is important because there
is a silver lining.
And that's that I'm walking in to firms everyday who are increasing their
investment and how they can harness the power of the Internet to increase
productivity growth inside their firms rather than....
JIM LEHRER: These are traditional firms? These are not high-tech firms or
dot-coms?
DIANE SWONK: This was the old-line industries, exactly.
JIM LEHRER: All right.
DIANE SWONK: Literally the life was being sucked out of it a year ago when
the NASDAQ was booming. And I think there's been -- we've also seen many old
line firms who could not find tech workers finally able to find them. An
irony in my own backyard is Lucent Technologies. They had a lot of layoffs
there recently announced, although at the same time, they're trying to
scramble to hire tech workers. In fact, seven out of ten tech workers today
work in old line industries and those old line industries are still
scrambling to find workers so they're being absorbed fairly quickly in this
economy that continues to generate more demand for workers than actual
workers. And that's a very important shock absorber that I think we have to
take into account.
JIM LEHRER: And, Mr. Sommers, you already mentioned high tech. That's a
really big deal out in your part of the world, is it not?
PAUL SOMMERS: It is indeed. The software sector in particular in this state
has grown more rapidly than anything else and continues to grow while the
dot-coms have shrunk. We've lost maybe 8,000 jobs among dot-coms in
Washington but gained more than 10,000 in software in the same year.
JIM LEHRER: Now, explain why that could be, for those of us who don't follow
this sort of thing.
PAUL SOMMERS: Many of the software companies are providing tools that help
the dot-com types the e-commerce companies. So there is a little bit of a
spillover impact there. But the others are selling main line software
applications that have much broader utility than just e-commerce. And those
companies led by Microsoft have continued to grow.
JIM LEHRER: Microsoft is still hiring, right?
PAUL SOMMERS: Microsoft is hiring but at a slower pace. This is one of
the reasons you have to think of it, I think, as a slowdown, not as a
recession. Microsoft grew by about 7,000 people over the last year. They've
announced that they're going to hire another 2100 or so in the next 18
months; so slower but still growing.
JIM LEHRER: Mr. Naroff what's high tech mean in the Northeast?
JOEL NAROFF: Well, high tech has its importance here. There's no question.
Diane mentioned about Lucent in New Jersey is obviously very dependent on
it.
JIM LEHRER: Because Lucent is headquartered in New Jersey.
JOEL NAROFF: That's correct. And obviously that's a concern here. But it
isn't nearly as great, it doesn't have the concentrations, it has the
pockets. There's pockets in Philadelphia, pockets in New Jersey -- and
obviously up through Connecticut and especially in Massachusetts. So it does
make a difference. But I think one of the things to keep in mind is that
there is a real dark side to the productivity gains that we've begun to see
here. And that's the idea that businesses are reacting very rapidly to the
changes in the economy, the slowdown. They're reacting all at once. And so
what we're seeing is a compression of the adjustment process now. Whether
it's in high tech or it's in manufacturing, we're seeing a long-term six,
nine, 12 month compression occur in six or 12 weeks. And that makes it look
like it's a lot worse than it actually is. We're seeing it here in the
Northeast, but again it's not nearly as significant.
Reacting to the stock market
JIM LEHRER: Mr. Naroff, what about Wall Street? What effect... everybody
in the news business including our program, we always report the market is
up or down. Yesterday heavy thing and NASDAQ was way down. Dow Jones was way
down. What's the effect on Main Street Northeast to the stock market?
JOEL NAROFF: Well, obviously especially in the New York metropolitan area,
Northern New Jersey, Southern Connecticut, incomes are going to be
affected by that. We'll see what happens as we move through this year in
terms of the ability to spend. And a lot of it is going to affect it on
the larger side, the luxury types of expenditures whether high-cost vehicles
or houses down at the shore or whatever may be the case. We're beginning to
see a little bit of slowdown. But again I talked to real estate agents
down on the New Jersey shore, and they're not seeing any sort of major
cutback as far as that's concerned -- a slowdown, yeah. We expect to see it.
And that's probably the biggest impact. It will affect the New Jersey, New
York, Connecticut area though.
JIM LEHRER: Ms. Swonk, does bad news on Wall Street affect what an average
consumer would do in the Midwest?
DIANE SWONK: It has more of an effect on their expectations. Half of
households have - you know-- something invested in the stock market. But the
overwhelming majority of households, the largest asset they hold is the
money in their homes. We've seen mortgage refinancings surge in recent
months actually and stay at high levels. It means they're cashing in on the
equity in their homes, rather than worrying about the equity in the stock
market at the moment. And I think that's part of the reason we've seen
spending so resilient in the face of these stock market woes. I think
unfortunately Wall Street certainly has a role in understanding the economy,
but because so much of our news is based off Wall Street, we often get a
very misperception of it about what happens to Main Street America. To Main
Street America what's more important to them is the fact that their real
wages are still intact and rising; the paychecks they take home every other
week are still rising, relative to overall price levels. That's what's
important, and that's something that hasn't happened in 30 years with the
kind of run we've had over the last several years. And I think that's what's
dominating spending right now.
JIM LEHRER: Mr. Vitner, would you read it the same way in terms of Wall
Street in the South?
MARK VITNER: I read it a little bit differently. If you look at retail
sales relative to after-tax income, in the period where the stock market
boomed in 1999 and early 2000, spending grew two to two-and-a-half times
faster than after-tax income for a period of 18 months. And that was pretty
much unprecedented in the history of this country or at least in the post
war period. Now, we're seeing a little bit of a pay back. For the last six
months retail sales have been growing less than after-tax income. And I
think we're going to see a continued payback probably through the rest of
this year. Retail sales are still growing; they're just not growing as
rapidly now that the market has come off a bit.
JIM LEHRER: Okay. Mr. Sommers - Yeah - let me just ask Mr. Sommers on Wall
Street before we go. Yes, sir.
PAUL SOMMERS: The one difference I would say out here is that a substantial
amount of stock wealth accrue to people who got stock options at Microsoft,
McCaw Cellular, some of the other successful companies. Those people were
the investors that fueled the dot-com boom and much of the high- tech boom
out here. They're feeling less wealthy; they're much less likely to
invest money right now. That has a real long-term effect that I do worry
about here.
JIM LEHRER: All right. Yes, quickly, Ms. Swonk, you wanted to say something.
DIANE SWONK: I just wanted to say that the stock market when we had all
those strong spending gains, which had very low oil prices and a mortgage
refinancing boom that was delivering $60 billion in cash to consumer
pockets. That money is spent directly on my capital gains which has turned
around. So I think a lot of factors contributed to the gains we saw in
recent years. It was not purely a stock market phenomena. Let's face it, the
savings rate is still falling. If it was a wealth effect, it should be
rising now.
JIM LEHRER: All right. I got you and our time has spent. And thank you all
four very much. |
