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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: robsiv who wrote (120221)	12/22/2000 4:49:37 PM
From: 2MAR$	Respond to of 120523

WRAPUP 3-U.S. factories busier, spending up in Nov (Updates with closing market quotes paragraphs 22-23) By Glenn Somerville WASHINGTON, Dec 22 (Reuters) - U.S. factories were busier last month and consumers kept pushing up their spending, the government said on Friday in reports that showed the gradually slowing economy still has underlying strength. The Commerce Department said the value of new orders for long-lasting durable goods, from refrigerators to new cars, was up 2.3 percent to a seasonally adjusted $210.94 billion last month. That partly recovered a 6.5 percent drop in October. Separately, Commerce said consumer incomes from wages, salaries, investment and all other sources rose 0.4 percent to a seasonally adjusted annual rate of $8.44 trillion last month, recovering from a revised 0.1 percent drop in October. That enabled shoppers to boost spending by 0.3 percent to $6.905 trillion in November after a 0.4 percent rise in October. It was the smallest monthly spending increase since May, when it also gained by 0.3 percent, but it did show consumers still were shopping. Merchants reported lackluster sales in the early days of the vital Thanksgiving-to-Christmas holiday season, heightening worry that an economic slowdown could quickly steepen into a more serious downturn. SLOWDOWN OR SKID? Analysts said the reports on Friday eased some concern about the speed with which the economy was losing steam, though they did not change the picture of a slowdown. "These numbers aren't revving up the economic engine, but indicate that the brakes aren't on quite as hard," said economist Dave Huether of the National Association of Manufacturers. Earlier this week, the Federal Reserve indicated it was preparing to cut interest rates next year in response to slackening consumer confidence and to reports of "substantial shortfalls" in corporate sales and profits. The developing slowdown also has triggered a political debate between the outgoing Clinton administration and President-elect George W. Bush's incoming team about whether or not the slowdown could develop into recession. Treasury Secretary Lawrence Summers said on Thursday that prospects were for steady, moderate growth around a rate of 3 percent over the next four quarters. Vice President-elect Dick Cheney said, however, that the incoming administration has to be ready for any eventuality as economic activity weakens. "Whether or not this ultimately results in a recession, that is negative real growth, nobody knows at this time," Cheney said on Thursday. The United States has enjoyed unbroken growth since March 1991, when the last recession ended. Consumer spending is the lifeblood of the U.S. expansion, since purchases of goods and services fuel two-thirds of national economic activity. CONSUMERS NERVOUS ABOUT FUTURE There were fresh signs on Friday consumers were growing increasingly nervous. The University of Michigan's consumer confidence survey, issued only to paying customers, fell to its lowest level in more than two years in December. It was down to 98.4 from 107.6 -- the lowest since October 1998 when Russia devalued its currency and a big U.S. hedge fund collapse sent shock waves through the global economy. Some analysts said that on the basis of evidence so far, the apparent fear of an accelerating slowdown was overdone. "Income growth is the key measure to determine we are heading into a recession and people have the funds to spend," said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pa. He added that the talk of economic woe seemed to be centered on Wall Street among stock traders rather than on Main Street among ordinary consumers. A leading U.S. retail group, the National Retail Federation, said members remained optimistic about eking out decent sales with two shopping days to go before Christmas. "In spite of the doom and gloom that's been reported, we believe retailers do have a chance to turn in a respectable performance this year," the lobby group's president Tracy Mullin told reporters. She said sales should be up about five percent from a year ago, not enough to match last year's exceptionally vigorous 7.3 percent increase. Consumer spending in November was supported by draining savings, which analysts warn increases a slowing economy's vulnerability to a sharp downturn if jobs become scarcer. The personal savings rate was a negative 0.8 percent in November -- a record low -- after being down 0.7 percent in October. Regarding factory orders, November's pickup was centered in transportation products, especially aircraft. Transportation orders that account for more than one-fifth of monthly business rose 9.1 percent to $48.12 billion after plunging 17.3 percent in October. Without transportation, November durables orders gained a slim 0.4 percent after dropping 3.1 percent in October. Stock prices bounced higher on Friday after a recent bout of queasiness. The Dow Jones Industrial Average closed up 148.27 points at 10,635.56 and the high tech-laden Nasdaq composite index powered ahead 176.90 points to close at 2,517.02. Bond prices also were up, with the 30-year Treasury bond gaining 9/32 of a point as its yield dipped to 5.40 percent. ((Washington newsroom 202-898-8395, fax 202-682-1522, email: washington.economic.newsroom@reuters.com)) REUTERS * end of story *