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To: Jim Willie CB who wrote (48465)	3/7/2002 11:47:46 AM
From: stockman_scott	Respond to of 65232

Productivity Stronger Than Expected Updated 9:14 AM ET March 7, 2002 WASHINGTON (Reuters) - The productivity of U.S. workers rocketed past expectations in the final three months of last year to post the biggest increase since the second quarter of 2000, the government said on Thursday. The Labor Department, said productivity, or worker output of goods and services per hour outside the farm sector, rose at a 5.2 percent annual rate in the fourth quarter, revised upward from an initial estimate of 3.5 percent. The increase surpassed analysts' expectations for a 4.5 percent rise. ``It was expected but stunning,'' said Jim Glassman, senior economist at JP Morgan. ``I think it's a reminder that underlying productivity gains have accelerated.'' The Federal Reserve, led by Alan Greenspan, watches productivity closely since it is credited with allowing the U.S. economy to log swift growth in the late 1990s without fanning excessive price pressures. With the economy in recession since last March, businesses continued to cut back on the numbers of hours worked. The number of hours spent on the job fell 3.8 percent, the largest decline since the first quarter of 1991 when the economy was last in recession and when hours worked fell 4.8 percent. Unit labor costs, a closely watched gauge of wage pressures, fell 2.7 percent during the fourth quarter, the steepest decline since a drop of 2.9 percent in the final quarter of 1999 and more than the 2.1 percent fall analysts were expecting. For the full year, nonfarm productivity advanced just 1.9 percent, the weakest annual performance since a 0.9 percent rise in 1995. Unit labor costs for the year rose 3.8 percent, the biggest annual rise since a 4.3 percent gain in 1990. Usually, productivity declines during an economic downturn as output usually falls faster than hours worked. But it has held up remarkably well during the latest recession. ``It's a reminder that the growth potential for the United States is much higher than it used to be,'' said Glassman. ``It's the reason why the Fed is so relaxed.'' The Fed is next due to meet to discuss interest rates on March 19. A poll by Reuters at the end of last month showed Wall Street is expecting rates to be left unchanged.

To: Jim Willie CB who wrote (48465)	3/7/2002 11:57:31 AM
From: stockman_scott	Read Replies (2) \| Respond to of 65232

Greenspan Says Recovery Has Begun By JEANNINE AVERSA, Associated Press Writer Thu Mar 7,11:40 AM ET WASHINGTON (AP) - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) offered his most optimistic assessment of the U.S. economy in more than a year, telling Congress Thursday that the country is now recovering from its first recession in a decade. Greenspan's testimony to the Senate Banking Committee was more upbeat than his outlook just a week ago. "The recent evidence increasingly suggests that an economic expansion is already under way," Greenspan said. That assessment was not part of his testimony to the House Financial Services Committee last week. Since Greenspan's last appearance on Capitol Hill, a batch of encouraging economic news has been released providing strong evidence that the country is on the mend from the recession, which began in March 2001. For the first time in 18 months, a key gauge of manufacturing activity flashed a growth signal in February. Consumers, the lifeblood of the economy, spent more freely in January. And, the economy bounced back with a 1.4 percent growth rate in the fourth quarter of 2001, after shrinking at a 1.3 percent rate following the Sept. 11 terrorist attacks. Even with his more upbeat assessment, Greenspan cautioned Americans not to anticipate a red-hot rebound. "An array of influences unique to this business cycle seems likely to moderate its speed," Greenspan said. Because consumers kept buying throughout the slump, they will have less pent-up demand. That means spending probably won't rise as quickly as in past rebounds, making the recovery less robust than usual, Greenspan said. That strength in consumer spending, which accounts for two-thirds of all economic activity, is a key reason why the economy didn't sink deeper into a recession. Consumer spending on big-ticket items, such as homes and cars, is usually hard-hit during recessions. Economists said Greenspan's remarks make it all but certain that the Fed's aggressive rate-cutting campaign has ended. They predict that Fed policy-makers, who left short-term interest rates unchanged in January, will forgo a reduction at their next meeting on March 19. "The Fed chairman was extremely cautious last week and seemed to be tiptoeing around the idea that an economic rebound could be forming," said economist Joel Naroff of Naroff Economic Advisors. "Today, he seems willing to accept the fact that the economy has turned a corner, but he still sounded caution about the strength of the expansion that will follow." Naroff suggested Greenspan's more upbeat remarks could be the first step toward trying to prepare the country for the possibility that the Fed could boost interest rates sometime down the road. Lynn Reaser, chief economist at Banc of America Capital Management, agreed. "The Fed has done its work and succeeded in helping to foster a recovery and now the challenge will be to manage the expansion," Reaser said. She predicted that the Fed's first rate increase could come as soon as midyear. Stocks were mixed Thursday. By late morning the Dow Jones industrial average had lost 48 points but the Nasdaq index was up 5 points. Recent reports, meanwhile, also have shown that orders to U.S. factories for big-ticket manufactured goods, including cars, has been picking up. "We have seen encouraging signs in recent days that underlying trends in final demand are strengthening, although the dimensions of the pickup remain uncertain," Greenspan said, in another addition to his Senate testimony that wasn't included in his House testimony. Greenspan said that consumer spending received a considerable lift from the sales of cars and trucks, which were remarkably strong in October and November, aided by major financing incentives. "Sales have receded somewhat, but they have remained surprisingly resilient," Greenspan said. "Other consumer spending appears to have advanced at a solid pace in recent months." Greenspan repeated his belief that the recession will probably turn out to be the mildest in U.S. history. Based on current data, the drop in economic output during this recession, as measured by the gross domestic product, is a small 0.3 percent, which would make this the mildest recession ever. That record has been held by the 1969-70 recession, which GDP (news - web sites) fell by 0.6 percent. Economists predict the National Bureau of Economic Research, the recognized arbiters of when recessions begin and end, will declare this one ended in December, January or February. The Federal Reserve slashed interest rates 11 times last year in an effort to revive the economy. Many economists believe those rate cuts will pave the way for the economy to return to healthy growth rates in the second half of this year.

To: Jim Willie CB who wrote (48465)	3/7/2002 12:40:20 PM
From: Sully-	Respond to of 65232

12:21 ET Crude oil spikes higher : The front month futures contract has risen to its highest level in six months on significant volume. The sabre rattling by Iraq and commentary from Greenspan that was more optimistic than the House testimony from last week has bolstered the market. The oil service (OSX +1.9%) and natural gas (XNG +2%) sectors are also posting strong gains.