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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (59685)	1/30/2002 10:41:25 AM
From: michael97123	Respond to of 70976

U.S. GDP grew in 4Q January 30, 2002: 9:41 a.m. ET Growth in broad measure of economy bucks expectations of further decline. NEW YORK (CNN/Money) - The U.S. economy unexpectedly grew in the fourth quarter, the government said Wednesday, bucking widespread forecasts for contraction after the Sept. 11 terrorist attack. Gross domestic product, the broadest measure of the U.S. economy, grew at a 0.2 percent annual rate, the Commerce Department said. Strong auto sales and a nearly 10 percent jump in government spending in response to the Sept. 11 attacks gave the economy a boost. Analysts surveyed by Briefing.com had forecast a 1.1 percent drop in the quarter, which would have meant the economy was in a recession by the traditional definition of two or more straight quarters of declining economic activity. GDP fell at a 1.3 percent rate in the third quarter. Lower tax rates and tax refund checks received by many Americans in the fourth quarter helped boost consumer spending, the department said. Spending on durable goods jumped 38.4 percent in the quarter, led mostly by auto sales, which saw a record sales pace in October sparked by zero-interest financing incentives from major automakers. "Certainly those auto incentives were helpful in giving us that growth in the fourth quarter," said Wayne Ayers, chief economist for Fleet Boston Financial Corp, in an appearance on CNNfn's Before Hours. "But we have to remember that even outside of autos, the consumers have really hung in there. I don't think it's entirely a fluke. I don't think it accounts for the ongoing strength of the consumer." On Wall Street, stocks started mixed after Tuesday's big declines. But consumer spending and further economic growth will be limited since about 1.4 million people have lost their jobs in recent months, while others are fearful for their jobs. Recognizing this, President Bush in his first State of the Union address Tuesday night pledged that jobs would be one of his top priorities, and challenged Congress to pass a bill extending unemployment benefits and giving tax cuts to spur business investment. Still, the need for additional stimulus was questioned last week by Federal Reserve Chairman Alan Greenspan, who cited growing signs that the economy was close to mounting a recovery. The Fed is holding the second day of a two-day meeting Wednesday on the economy and interest rates. Most analysts expect the central bank to hold rates steady after 11 rate cuts last year designed to spur the economy. "I don't think the Fed has a lot of choice at this point," said Ayers. "This economy may be on the verge of an imminent if tepid recovery. I don't think they can afford to do anything other than to leave rates unchanged." In its report, the department said imports fell 3.4 percent in the quarter, led by lower oil consumption and energy prices. Lower imports give a boost to GDP since imports tend to displace domestic production. The fourth-quarter GDP reading will be revised twice by the government as more statistics become available.

To: michael97123 who wrote (59685)	1/30/2002 11:27:13 AM
From: runes	Read Replies (2) \| Respond to of 70976

Michael - war effects - Historically, wars are good for the economy. They require increased spending to fuel the war machine which increases the employment. All of this is done through deficit spending. Of course this tends to lead to a post-war hangover as the defense industry ramps back down and the budget deficit comes due. (Deficit spending = sell more bonds = higher interest rates = less money in the stock market) In this case though, we are talking about a limited war. So there should be much less impact on the economy as a whole. Unfortunately, it sure seems to be going after the budget in a big way. Sadly, the government seems to have decided to take responsibility for businesses losses as a result of 911. (Major gripe #1 - the more business money that goes to political parties, the more handouts they are getting. God forbid that business should be responsible for their own risk management!). The good news for tech is that the "war" spending and the "security" spending is definitely tech focused. Smart bombs, electronic surveillance, chemical sensors, facial recognition, forensic accounting. All high tech, all needs chips. AMAT will get a trickledown effect via the semis. (Major gripe #2 - 90% of security spending is wasted money. At best it causes the terrorist to change their targets in a target rich environment). PS - Major gripe #3 - Bush is pushing the security threat and the global terror "war" because it suits his political agenda. It already propelled him from a flagging Presidency into a strong leadership role. IMO - he wants to turn the "war" into his legacy. I fear that this will turn into another drug war - a lot of money spent, a lot of "victories" but no meaningful improvement in our security. (Apologies to the board for the political rambling but I have a nasty feeling about where we are being led)