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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (1188)	5/24/2001 4:00:44 PM
From: Wally Mastroly	Respond to of 10065

Mr GJ, ..another link via Les H. - from the (hawkish?) SF FED - The Gyrating Nasdaq. frbsf.org Not sure if they mean Irrational Exuberance or Rational Exuberance <bigger grin>

To: MrGreenJeans who wrote (1188)	5/25/2001 8:46:31 AM
From: Boca_PETE	Read Replies (1) \| Respond to of 10065

First-Quarter GDP Revised Down to 1.3 Pct. biz.yahoo.com P

To: MrGreenJeans who wrote (1188)	5/30/2001 6:07:57 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 10065

Contradictory rules make recession hard to predict By George Hager, USA TODAY - 05/29/2001 - Updated 11:05 AM ET In trying to figure out whether the economy will go into a recession — or might already be in one — there are two helpful rules. Unfortunately, they completely contradict each other. Rule No. 1: At least since 1970, the economy has never had a recession when the housing market was strong, says economist Joel Naroff of Naroff Economic Advisors. And despite a drop-off in sales of new and existing homes in April from near-record levels in March, housing is still quite strong by historical standards. If this rule governs, we're not in a recession yet — nor likely to go into one anytime soon. "Repeat after me: The economy will not go into recession if the housing market remains strong," says Naroff. Rule No. 2: The economy has almost never avoided a recession when the Labor Department's monthly employment report showed back-to-back net job losses. That has happened just 12 times since 1950, according to First Union economist Mark Vitner, and except for the four times when strikes, weather or other anomalies were the cause, it was a signal that the nation was in, or about to be in, a recession. Alas, it has just happened again. Labor Department figures showed back-to-back job losses in March and April. And it looks as if May might also show a loss, when the number is released Friday. Vitner says upcoming jobs reports will rival those seen during the last recession, in 1990-91, making it likely that what we're enduring is either a full-blown recession or something just about as ugly. So far, though, the economy hasn't met the usual rough definition of a recession, which is at least two consecutive quarters of sub-zero growth. The economy grew at a barely positive 1% annual rate in the last quarter of 2000 and at an only slightly less anemic 1.3% in the first quarter of this year. That's way below the 3.5% or so growth economists say would be a healthy rate for this economy. And it's sluggish enough to mean that a souring labor market and any shock — another big jump in energy prices, for example — could knock the economy into recession. But most economists still think we're not there yet, and not likely to go there before a rebound puts the slowdown behind us sometime this year or next. On the other hand, though, most economists also increasingly admit they're not entirely sure how this will turn out. For example, Federal Reserve Chairman Alan Greenspan's speech last Thursday to a group of economists in New York was peppered with doubts. Greenspan said a recovery was likely, but admitted there were "considerable uncertainties about its timing and magnitude." And while the rapid rate at which businesses have sold off their bloated inventories could set the stage for a recovery soon, he said "further weakening" in business investment and consumer spending could get in the way. We'll only know how that works out "in the weeks and months ahead," Greenspan said. And despite a weak stock market and soaring household debt, consumers have remained remarkably willing to keep spending, which is crucial to avoiding a recession. But Greenspan fretted that there are "downside risks" that could slow or stop that spending over "the next few quarters," or until next year. Optimists think the Fed's aggressive rate-cutting will combine with other factors to steer the economy right along the edge of the cliff, but not over it. The speed with which businesses slashed inventories means the economy won't slump long enough to fester into recession, says Joe Liro of Stone & McCarthy Research Associates. With the Fed ready to cut rates further, the outcome should be "a painful slowdown that. .. will hit bottom" by midyear, "with growth reviving to (a) more vibrant rate by the fourth quarter." Meanwhile, though, with manufacturing in its own mini-recession and unemployment rising, debating whether this slowdown meets the textbook definition of a recession is a little silly, says Vitner, who likens it to going outside after a destructive storm and wondering precisely what just happened. "Was it a tornado? Heck, I don't know, but it sure did tear up a lot of things," he says. Did it fit the technical definition of a tornado? "The guy who had his house smashed doesn't care."