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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Skywatcher who wrote (227822)	2/17/2002 4:05:41 PM
From: jlallen	Read Replies (1) \| Respond to of 769670

Thanks. Coming from KKKhris KKKonsidine, I consider that quite a compliment.... JLA

To: Skywatcher who wrote (227822)	2/17/2002 4:11:18 PM
From: jlallen	Respond to of 769670

Good news for the economy. Bad news for demolib smear artists like Daschle and Gephardt... Customers Wanted, Warehouses Near Empty Feb 17 1:15pm ET By Eric Burroughs NEW YORK (Reuters) - Businesses clearing warehouses of unsold goods shoved the U.S. economy into recession last year. Now, with the inventory slashing nearly done, the U.S. economy should get a hefty shot in the arm in 2002. But are there enough customers hungry for new sport utility vehicles and DVDs and enough businesses needing faster computers for the growth spurt to last? The end of inventory liquidation paves the way for firms to start churning out more goods, adding roughly 1 percent to 2 percent to growth this year. That's enough to help the economy steer out of its first recession in more than a decade. Even with that boost, economists predict any recovery is going to be sluggish compared to rebounds from prior recessions and say it is far from certain businesses and manufacturers will find enough new demand to kick production into high gear. "Caution and conservatism will rule the day," John Ryding, chief market economist at Bear Stearns, said. Federal Reserve Chairman Alan Greenspan has expressed worries that consumer and business demand will not be strong enough to spur a sharp rise in production and that any growth burst will be short-lived. Corporations also are wary. Just recently Lucent Technologies Inc. , the telecommunications giant, said that while it had weathered the worst in the sector's sharp drop in demand, there was no sign of an upturn. In fact, Lucent said it expected spending by telecom customers to fall about 20 percent in 2002. ENRON CHILL The chill wind blowing through capital markets from energy trader Enron's collapse worsens the outlook, some analysts said. The heightened attention on accounting practices and credit quality could dent the ability of companies to raise the money they need to finance new production and investment. "Corporations are still running a financing gap, and with Enron's situation shining a strong flashlight on balance sheets, businesses will not have the wherewithal to fund much of a buildup of inventories," said Bill Dudley, chief U.S. economist at Goldman Sachs. Corporations won't get much help from abroad either, with growth sluggish in Europe and Japan in a decade-long slump. The massive reduction of inventories last year, particularly in the telecommunications and technology sector, was the primary reason the economy tipped into recession. Firms boosted production capacity massively in the go-go days of the late 1990s to meet the heavy demand for computers, modems and the like, especially in the run-up to the centennial date change, known as Y2K. Then orders suddenly began to dry up in mid 2000, producers were suddenly left with huge piles of unsold goods and were forced to idle factories. By the fourth quarter of last year, companies burned through inventories by a record $120.6 billion. As the pace of business inventory liquidation begins to slow -- in December it dropped only 0.4 percent after a 1.2 percent decline in November and 1.6 percent plunge in October -- production increases, and gross domestic product receives a jolt. "If that pace is sustained in the first quarter, we'll have 3.5 percent growth added to GDP," Ryding said of December's slowdown in inventory reduction. After accounting for trade and other factors, Ryding predicts 2.5 percent growth in the first quarter. While that might seem a healthy pace, it would be well below the 7 percent or higher growth rates seen in the first quarters of recovery after nearly all post-World War Two recessions. Economists worry that while demand from both businesses and consumers may allow firms to get inventories back to flat levels, they will not power a big pickup in production. "Production is going to increase, but the question is how fast. Nothing we've seen suggests output is roaring back the way the spending numbers might suggest," said Jim O'Sullivan, senior economist at UBS Warubrg. SHOPPERS TO THE RESCUE? Certainly many technology giants remain very cautious and talk only of demand stabilizing -- not rebounding. Intel Corp. said it was slashing capital investments 25 percent this year. Other surveys have forecast capital spending on chip-making equipment -- the front line of technology investment -- to fall by that amount. But some companies like Applied Materials, which provides equipment to chip makers, have said that semiconductor revenues have apparently hit bottom, memory chip prices have risen and activity in semiconductor factories has increased. Other indicators show that manufacturers are increasing production for the first time in several months, and output of high-tech goods rose 1.2 percent in the last three months. Indeed, Federal Reserve Bank of St. Louis President William Poole said last week production would likely roar back this year once the heated pace of inventory liquidation abates. "Provided that final demand doesn't tank ... the inventory swing by itself gives you an enormous increase in production," Poole said. The bright spot is retail sales, which have consistently beat expectations. While consumer confidence has pulled back slightly from peaks hit in January, it is still pointing toward recovery and consistently solid consumer spending. The happy consumer, who fuels two-thirds of all U.S. economic activity, could continue to surprise and be the spark that ignites a faster recovery in production, said Goldman Sachs.