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To: PCSS who wrote (466)	5/19/2002 12:07:51 PM
From: Elwood P. Dowd	Respond to of 4345

KPMG May Sell Consulting Unit for $495 Mln, London Times Says By Nick Nabarro Washington, May 19 (Bloomberg) -- KPMG LLP, the third-largest U.S. accounting firm, may next week announce the sale of its consulting unit for 340 million pounds ($495 million), the Sunday Times reported, citing no sources. Potential buyers include KPMG Consulting Inc., which split from the auditing unit in 1999, International Business Machines Corp. and Compaq Computer Corp., which was acquired earlier this month by Hewlett-Packard Co., the newspaper said. Rival accountancy firms such as Deloitte & Touche LLP are also selling their consulting businesses. Arthur Andersen LLP is on trial in Houston charged with obstructing justice by shredding documents related to its audit of Enron Corp. Enron also employed Andersen as a consultant. Closely held KPMG had $3.4 billion in U.S. revenue in the fiscal year ended last June 30, and $11.7 billion in international revenue. (Sunday Times 5-19 B-3)

To: PCSS who wrote (466)	5/19/2002 3:29:32 PM
From: Elwood P. Dowd	Read Replies (2) \| Respond to of 4345

Doomsayers Ring Alarm Bells on Recovery Sunday May 19, 2:47 pm Eastern Time Reuters Business Report Doomsayers Ring Alarm Bells on Recovery By Eric Burroughs NEW YORK (Reuters) - As the giant U.S. economy zooms out of its first recession in a decade, some doomsayers keep sounding alarm bells that the rebound is poised to sour into a deeper funk -- a so-called "double-dip" recession. The grim scenario goes something like this: consumer spending stumbles, unemployment shoots higher, stocks head for another nosedive, dormant inflation turns into suffocating deflation. And the Federal Reserve, having already slashed short-term rates to 40-year lows of 1.75 percent to spur growth, will have little room left to cut rates any more. "The odds of a double-dip in the U.S. economy are not nearly as low as you have been led to believe," warned Stephen Roach, chief economist at Morgan Stanley. He was a lone voice in predicting recession in early 2001 and for months, has argued persistently that a return to recession is on the way. Just recently U.S. stocks faltered and the dollar trembled as investors fretted that the U.S. economy was headed for more trouble since a much-awaited recovery in corporate profits was nowhere on the horizon. Part of the fear stems from anxiety that American consumers -- who have shouldered the economy through the recession by gleefully snapping up homes and autos -- will throw in the towel before business profits and investment returns. That could lead to more layoffs, spending cuts and pain to come. But for many economists the message to the bleak pessimists is simple -- think again. "The recovery dynamic has started," said Paul Kasriel, chief U.S. economist at Northern Trust in Chicago. Kasriel cited several positive forces: a Federal Reserve intent on keeping interest rates low, government spending on the rise, building recovery in hard-hit manufacturing, workers logging overtime and capital spending slowly improving. Yet there are risks, from the heavy debt loads both households and businesses carry, to the persistent weakness in the labor market, seen most recently in the unemployment rise to 7 1/2-year highs in April. The shock of a terror attack also could reverse the economy's tentative recovery, as could a misstep by the central bank. "If the Fed were to start to tighten aggressively sooner than later, I think there's a risk of tipping the economy back into recession because of the debt situation in both household and corporate sectors," Kasriel said. "But the Fed doesn't want to do that. Alan Greenspan has given every indication he wants to hold out as long as possible before raising rates. As long as Alan is afraid to raise rates, that greatly reduces the odds of a double-dip," he said. Certainly some of the most recent data have shown Americans are in no mood to back down from their shopping sprees. Last week, reports showed retail sales in April surged more than double economists' forecasts. And consumer sentiment soared to levels not seen in 1 1/2 years, implying more shopping to come. PESSIMISTS PERSIST Also last week, Chicago Fed President Michael Moskow confronted questions from one former journalist who brought up the fears of a Dutch trader that the U.S. economy is heading for a double-dip recession. While Moskow said he did not believe such a scenario would unfold, he did concede that this recovery has been built on the back of the consumer and needs a boost from corporate America. "In order for this to be sustainable, business firms first have to stop reducing their spending ... then they have to start increasing their spending," Moskow said. Perhaps no economist has more ardently argued that the U.S. economy is in bad shape than Morgan Stanley's Roach. Roach's view is that consumers will run out of steam and the profit squeeze in businesses -- exacerbated by high labor costs and the lack of pricing power -- will push the economy back into another contraction. History is on his side, Roach said in a recent research note. In five of the past six recessions the economy has suffered a double-dip recession as consumers pulled back on spending just as businesses were boosting production. But other economists argued with Roach's definitions. "This is not right," said Anirvan Banerji, research director at the Economic Cycle Research Institute (ECRI), whose different indicators have a strong track record for more than 40 years in predicting turning points in economic cycles. Banerji said Roach too broadly defines a double-dip recession. If the economy suffers three months of contraction after pulling out of recession, it does not necessarily qualify as a new recession. ECRI's indicators, which forecast as far as a year into the future by looking at real-time data on profits, productivity, money supply and other measures, see no new downturn in the economy though they do predict a tepid recovery. "People are confusing strength with sustainability," Banerji said. Those calling for a double-dip recession are just ringing "another false alarm," he said.