Greenspan to Deliver Report to Congress: U.S. Economy
Washington, Feb. 11 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan will tell
Congress this week whether the economy shows signs of sliding into recession or if it's set to
rebound from ``close to zero'' growth in coming months.
If recent comments from his colleagues are any indication, Greenspan's message to the Senate
Banking Committee during his semi-annual economic report on Tuesday will be that economic
growth is set to pick up later this year.
``A lot of the traditional signs of a recession are simply not visible,'' said William Poole, president
of the St. Louis Fed, in an interview last week with Bloomberg News.
That won't keep policy makers from cutting their benchmark overnight bank lending rate another
quarter percentage point at their March 20 meeting because ``there's no evidence that the
economy is showing signs of immediate improvement,'' said William Sullivan, an economist at
Morgan Stanley Dean Witter in New York.
Statistics due out this week will probably reinforce Greenspan's testimony to the Senate Budget
Committee on Jan. 25 that growth has fallen ``close to zero.''
Output of U.S. factories, mines and utilities probably stalled in January after falling 0.6 percent,
analysts said, highlighting the most visible weakness in the economy -- manufacturing. The Fed
is scheduled to release the industrial production report Friday. The plant-use rate also probably
declined amid production and job cuts.
A regional manufacturing report from the Philadelphia Fed on Thursday will also likely reflect the
change of fortunes for factories.
Factory Job Cuts
Labor Department figures released earlier this month showed manufacturers cut 65,000 jobs in
January, bringing the total number of factory jobs lost since June of last year to 254,000. What's
more, the purchasing managers' index of manufacturing fell in January to its lowest point in almost
10 years.
The weakness may not extend to other areas of the economy. Chicago Fed Bank President
Michael Moskow said last week that growth will rebound in the second half of the year and New
York Fed President William McDonough said the current slowdown looks like a ``very severe
inventory correction'' limited to manufacturing.
The housing industry has provided a cushion of sorts for the economy, thanks to lower mortgage
rates. Starts of housing construction probably showed little change, 1.55 million at an annual rate
in January versus 1.575 million during February, according to analysts. The Commerce
Department will issue that report Friday.
Retail Sales
And retailers, punished by sluggish demand and cold weather during the holiday shopping
season in November and December, will probably report sales reversed course in January,
rising 0.5 percent, analysts said. In December, retail sales rose just 0.1 percent. The Commerce
Department will issue that report Tuesday.
Such news suggests that the slowdown is a ``hiccup'' limited to American factories, Poole said.
Meantime, inflation isn't much of a concern.
Import prices, set for released Thursday at the Labor Department, probably held steady in
January after falling a month earlier. The producer price index, set for Friday release, probably
rose 0.2 percent in January after showing no change in December. Excluding food and energy,
the PPI probably increased 0.1 percent during January, analysts said.
In other reports:
-- Inventories at U.S. businesses probably piled up at a slower rate in December than a month
earlier, rising 0.3 percent, analysts said. An inventory buildup has hampered industrial output. In
November, inventories increased 0.5 percent, analysts said. The Commerce Department is
scheduled to release that report Wednesday.
-- Unemployment claims may rise further. Claims likely rose by 2,000 to 363,000 in the week
ended Feb. 10, analysts said. That report, from the Labor Department, is due out Thursday.
Bloomberg Survey
Date Time Period Indicator BN Survey Prior
2/13 8:30 Jan. Retail Sales 0.5% 0.1%
2/13 8:30 Jan. Retail Sales Ex-autos 0.4% 0.0%
2/14 8:30 Dec. Business Inventories 0.3% 0.5%
2/15 8:30 Jan. Import Prices 0.0% -0.5%
2/15 8:30 2/10 Initial Jobless Claims 363K 361K
2/15 10:00 Feb. Philadelphia Fed -25.0 -36.8
2/16 8:30 Jan. Housing Starts 1.55M 1.57M
2/16 8:30 Jan. Producer Price Index 0.2% 0.0%
2/16 8:30 Jan. PPI Ex-food & energy 0.1% 0.3%
2/16 9:15 Jan. Industrial Production 0.0% -0.6%
2/16 9:15 Jan. Capacity Utilization 80.3% 80.6%
Federal Reserve, Treasury
Tuesday, Feb. 13
Washington: Federal Reserve Chairman Alan Greenspan will discuss the U.S. economy and
monetary policy in testimony to the Senate Banking Committee.
Washington: Treasury Secretary Paul O'Neill testifies to the House Ways and Committee on the
proposed tax cut.
Thursday, Feb. 15
Washington: Treasury Secretary Paul O'Neill hold news conference in advance of Group of
Seven meeting of finance ministers and central bankers in Palermo, Italy.
Greensboro, North Carolina: Federal Reserve Bank of Richmond President Al Broaddus speaks
on behalf of Bennett College and the Greensboro Chamber of Commerce on U.S. economic
prospects for 2001.
Washington: Federal Reserve Governor Laurence Meyer will give the keynote address at the
American Law Institute/American Bar Association conference.
Little Rock, Arkansas: Federal Reserve Bank of St. Louis President William Poole speaks to the
Economic and Business Club of Little Rock.
Nashville, Tennessee: Federal Reserve Vice Chairman Roger Ferguson speaks on
``E-Commerce: Lessons Learned to Date'' at the Owen Distinguished Speaker Series, sponsored
by Owen Graduate School of Management at Vanderbilt University.
©2001 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks. |
