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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (34948)	3/29/2001 3:16:59 PM
From: stockman_scott	Respond to of 65232

Economy Crept Ahead As 2000 Ended Thursday March 29 By Glenn Somerville <<WASHINGTON (Reuters) - The weakest U.S. economic growth in 5-1/2 years at the end of 2000 bit deeply into corporate balance sheets as profits shrank for the first time in two years, the government reported on Thursday. While most analysts still see the record 10-year-old expansion barely escaping recession, a bleak profits picture kept battered financial markets on edge. ``We're still on the knife's edge,'' said Robert Dederick, economic consultant to Northern Trust Co. of Chicago. He noted there was an ongoing argument whether consumers will remain buoyed by relatively strong job opportunities or yield to fears of a falling stock market and stop spending. The Commerce Department said GDP, the measure of total goods and services output within U.S. borders, was revised down to a 1 percent annual rate of expansion in last year's fourth quarter from a previously reported 1.1 percent. Companies scaled back production and trimmed their investment spending in the face of overstocked inventories. Fourth-quarter GDP performance was down from a 2.2 percent rate of expansion in the third quarter and far below the first and second quarter's respective rates of 4.8 and 5.6 percent. The economy grew during the fourth quarter at its most feeble pace since a 0.8 percent rate in the second quarter of 1995, when it also was dealing with excess inventories. JOB MARKET STILL HAS LIFE Not all the economic news was negative on Thursday. Separately, the Labor Department said new claims for unemployment pay fell to 362,000 in the week ended March 24 from revised 382,000 for the prior week. That implied job markets were still relatively healthy, notwithstanding a drumbeat of layoffs recently by firms ranging from entertainment giant Walt Disney Co (NYSE:DIS - news) to high-tech leaders like Nortel Networks Corp. (NYSE:NT - news). Analysts said the GDP report left intact a picture of a sharply slowing economy at the beginning of 2001 but did not clarify whether a record expansion since the 1990-91 recession ended was at serious risk of stalling out. ``The economy wasn't falling apart by any means but growth was way below potential,'' Dederick said. ``We're just skating along the edge of recession but, as the profit numbers show, this is still a situation that can cause a lot of pain.'' The Federal Reserve has cut interest rates aggressively this year, dropping them on three occasions since the beginning of January by a half-percentage point each time, in a bid to pep up a sluggish expansion and stave off potential recession. The Fed is next scheduled to consider interest-rate strategy on May 15. It could always cut rates again between meetings as it did on Jan. 3 but analysts said the GDP report shed no light on that possibility. NO LIGHT SHED ON FED MOVES ``I don't think this has strong implications for that,'' said economist Michael Moran of Daiwa Securities America Inc. in New York, who focused on the harm caused to corporate profits. ``The weakness was broad-based,'' Moran noted. ``Most industries lost money in the last quarter of the year.'' Commerce said after-tax profits shrank 4.3 percent to an annual rate of $626.4 billion, after growing 0.6 percent in the third quarter. It was the first time since the fourth quarter of 1998, when profits decreased 1.6 percent, that businesses reported lower earnings than in the prior quarter. The disappearance of profits is the key reason stock prices have plunged over the past half year, and that anxiety continues to run high in financial markets. Stock prices treaded water on Thursday, with the Dow Jones industrial average ahead about 36 points, less than one percent, in early afternoon while the Nasdaq composite index was down about one percent. ``We had a decline in profits pretty close to recession-like proportions,'' Dederick said. Fourth-quarter profits were about $28 billion a year lower than the pace in the third quarter. ``The slowdown in real GDP growth reflected a downturn in the output of goods,'' Commerce said. It said businesses increased inventories at a revised $55.7 billion annual rate in the fourth quarter, instead of $59.5 billion as reported a month earlier, down from $72.5 billion in the third quarter. Reduced production for inventories subtracts from growth, but manufacturing companies are trying to sell down current stocks of goods and adjust to weaker new-order volumes. The bleaker economic outlook made companies cautious. Spending on new investment to expand output contracted slightly at a 0.1 percent annual rate after growing 7.7 percent in the third quarter -- the first time in nearly nine years that corporations trimmed spending. The last time they did so was in the first quarter of 1992, not long after the 1990-91 recession and just before a productivity-led investment boom started, when they cut spending at a 0.7 percent rate.>>

To: Jim Willie CB who wrote (34948)	3/29/2001 3:17:49 PM
From: Voltaire	Read Replies (2) \| Respond to of 65232

No sweat, 1. Fed still lowers 2. Baby boomers couldn't save a dime if they tried 3. Lay offs for the most part are a ruse. Just a convenient way for the Gorillas to cut back as a result of technology. I agree that there is a slowdown but Telecom's have been pulling the same s--- for years. 4. Houses continue selling 5. Autos continue selling 6. Dow at damn near record levels Primarily just .com indigestion. Picked up a few more of those sorry ass NEWP calls. Vster also wanting to work for Victoria's Secret