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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (66688)	1/12/2001 8:01:46 AM
From: John Carragher	Respond to of 99985

January 12, 2001 Clinton Team Paints a Positive Picture Before Handing Reins Over to Bush By YOCHI J. DREAZEN Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- White House officials painted a rosy picture of the economy that President Clinton will leave to his successor, but conceded that a recent barrage of worrisome data suggest that some of their forecasts might be too optimistic. The administration used the 402-page "Economic Report of the President" to take credit for the almost unprecedented levels of prosperity that the nation has enjoyed, as both the jobless rate and inflation hovered near 30-year lows. The report, set to be released Friday, was written by the president's three-member Council of Economic Advisors. With the Clinton White House set to hand over the reins to the incoming Bush administration, this year's economic outlook report takes on political significance, however. More than once, the incoming Bush team has warned that the economy is on the verge of a recession that could be averted only with a large tax cut. The Clinton administration, meanwhile, has defended its stewardship of the economy and accused the Bush team of recklessly sowing insecurity by exaggerating the downturn for political purposes. "Let me be clear: We don't think that we're going into recession," said CEA Chairman Martin Baily. "We continue to be very optimistic about this economy." Indeed, the report argues that the current expansion -- already the longest in American history -- will continue for at least the next decade, albeit at a somewhat slower pace. The report estimates that the economy grew by 4.1% last year and should grow by 3.2% per year until beginning to slow mildly in 2006 and beyond. Administration officials concede, though, that their growth estimates for 2000 and 2001 may be too optimistic. The forecast was completed in November, so it failed to include some of the data that have pummeled the stock market in recent weeks and led many government and private-sector analysts to warn that the economy may be in for a so-called hard landing. White House officials said that including the data would have reduced their 2000 and 2001 forecasts by about 0.4 percentage point per year. The report also predicts that the nation's rock-bottom unemployment rate will inch up to 4.1% this year before beginning a climb that will bring it to 5.1% by 2008. Administration officials believe that an unemployment rate of 5.1% is the lowest level that can be sustained over the long term without triggering a run-up in inflation. Despite volatile energy prices, meanwhile, the report argues that continuing gains in work-force efficiency should keep inflation under wraps. Consumer prices are expected to increase just 2.5% this year after increasing an estimated 3.4% in 2000. Productivity gains are expected to slow modestly from 3.7% last year to 2.5% per year in 2001 and 2002.