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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (11593)	11/30/2001 10:44:10 AM
From: LLCF	Read Replies (1) \| Respond to of 74559

GDP numbers "in line" with OUR expectations I see: Reuters Finance News GDP Contraction Sharper Than Thought Nov 30 9:10am ET By Glenn Somerville WASHINGTON (Reuters) - The U.S. economy shrank at a faster rate than first thought during the third quarter, contracting at the steepest pace in more than a decade as corporate profits tumbled for a fourth straight quarter, the Commerce Department reported on Friday. Gross domestic product (GDP), or total economic activity, decreased at a revised 1.1 percent rate -- nearly triple the 0.4 percent rate reported a month ago and worse than the 0.9 percent rate of contraction Wall Street economists had forecast. It was the poorest quarterly GDP performance since economic output shrank 2 percent in the first quarter of 1991 in the midst of the last recession. The numbers hardened a conviction that the Federal Reserve is likely to ease borrowing costs further after cutting them to 40-year lows earlier this month. "These numbers show the economy is, indeed, in recession and they leave the door open for the Fed to cut rates again," said economist Gary Thayer of A.G. Edwards and Sons Inc. in St. Louis, Mo. The central bank's policysetting committee is set to meet again on Dec. 11 amid wide expectations it will drop short-term interest rates for an 11th time this year. MORE RATE CUTS SEEN Economist Oscar Gonzalez of Boston-based John Hancock Financial Services said he anticipated another quarter-percentage point reduction in interest rates on Dec. 11 as the Fed tries to spur activity. "The lack of growth that we are seeing in the third quarter and expecting to see in the fourth quarter growth perhaps even worse than in the third quarter, with no inflation in sight -- these are the factors we need for another Federal Reserve rate cut," Gonzalez said. At the beginning of this week, the agency that officially dates U.S. business cycles confirmed the United States entered a recession in March. That is not yet reflected in GDP statistics that generally require two straight quarters of shrinking output to meet a commonly accepted definition of recession but private-sector analysts have no doubt the economy will shrink again in the current fourth quarter. There were a few promising signs in the GDP report, including the fact that inventories were drawn down at a $60.1-billion rate during the third quarter, the sharpest for any quarter on record. That implies companies made significant progress in bleeding off bloated stocks of unsold goods. An overhang of such goods would hold up production gains once recession ends. In addition, consumer spending advanced at a 1.1 percent annual rate, only slightly below the 1.2 percent pace estimated a month ago. While that was the weakest quarterly gain since a 0.8 percent rise in the first quarter of 1993 it nonetheless showed that spending, which fuels most U.S. economic activity, held up relatively well amid shrinking job opportunities and in the wake of the shock of Sept. 11 attacks that virtually stopped commerce for a few days. Commerce will issue its final estimate for third-quarter GDP on December 21. DAK