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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (71394)	5/24/2002 5:54:38 PM
From: Bruce A. Thompson	Read Replies (1) \| Respond to of 99280

Reuters Business Report Strong GDP Growth Masks Some Weakness By Tim Ahmann WASHINGTON (Reuters) - The U.S. economy bolted ahead at its fastest pace in nearly two years in the first quarter but the rise was not quite as rapid as initially thought, the government said on Friday in a report that showed weaker consumer and business spending than first estimated. Gross domestic product, a measure of the goods and services produced within U.S. borders, raced forward at a revised 5.6 percent annual rate in the first three months of the year, the Commerce Department said. The number reflected an economy climbing smartly out of recession, although it was a downward revision from the 5.8 percent gain the department reported a month ago and came as a surprise on Wall Street, where economists had expected a revision upward to 6.0 percent. In addition, the report's details suggested the economy was fundamentally weaker than the heady pace of GDP growth would suggest at first blush. The figures on consumer and business spending were revised down and more of the growth reflected a slowdown in the rate at which businesses reduced inventories. "When you look at the details, the economy has not picked up anything like what the overall GDP number implies," said Jim O'Sullivan, senior economist at UBS Warburg. The report bolstered the widely held view that the Federal Reserve would bide its time before deciding to raise its benchmark interest rate from a 40-year low of 1.75 percent, to give the economy more time to gain solid footing. Still, other recent reports -- including a separate report on Friday on sales of new homes -- have suggested the economy is already on firmer ground. The department said new home sales rose 1.0 percent in April to a seasonally adjusted annual rate of 915,000 units, the fastest sales pace in a year. Other signs the recovery is gaining traction include a solid advance in retail sales in April, rising industrial production, and an increase in orders for long-lasting manufactured goods in April that offered a hint a long downturn in business investment may be easing. The weaker-than-expected GDP report weighed on U.S. stock prices and the dollar while giving a boost to U.S. Treasury securities, which later reversed course on the strong housing report. DEVIL IS IN THE DETAILS The department said consumer spending advanced at a 3.2 percent pace in the first quarter -- still solid, but not as strong as the 3.5 percent increase first reported. That downward revision mostly reflected weaker spending on durable goods, such as cars, which fell at a 9.6 percent rate, the steepest falloff since a 13.1 percent plunge 11 years ago. A rush to take advantage of zero-percent financing for car purchases in the wake of the Sept. 11 attacks had pushed spending on durables up sharply near the end of last year. The first quarter figure for business investment spending was also revised lower. The department said business spending on structures, equipment and software plummeted 8.2 percent in the first quarter, considerably weaker than the initially estimated 5.7 percent drop. Still, business investment did not drop nearly as sharply as it had in the fourth quarter. Combined with the pickup in durable goods orders reported on Thursday, that offers hope the steep investment pullback that tipped the economy into recession was abating. The largest contributor to first-quarter growth was a big slowdown in the rate at which businesses reduced inventories. When businesses rely less heavily on inventories to meet demand they have to step up production, which raises GDP. The pace of inventory reduction in the first quarter was less dramatic than previously thought, giving more of a boost to GDP growth but not enough to offset other negative factors. Government spending rose sharply in the first quarter, although spending by state and local governments was somewhat weaker than the department had estimated earlier. While analysts said the GDP revisions suggested the economy had been a bit softer than believed earlier, they said the changes were small and did little to change the overall picture of an economy slowly returning to health. The report showed inflation under wraps, with the price index for personal consumption expenditures -- closely watched by Fed Chairman Alan Greenspan -- rising only 0.7 percent. Economists say a lack of inflation pressures buys the Fed time to allow the economy to gather steam before raising rates. The report contained some good news on businesses struggling to boost profits. The government's measure of after-tax corporate profits rose 0.9 percent in the first quarter of the year, the biggest gain since the second quarter of 2000. I don't know which is worse. The lies told by the crims to tout the last dollar out of the masses or the sleazy way they admit to the lies in the form of downward corrections. BT

To: DebtBomb who wrote (71394)	5/24/2002 5:58:18 PM
From: 2MAR$	Respond to of 99280

Don't worry , if things get too bad , companies can always announce another round of stoc buy-back programs , LOL that was quite the fashiion to announce those for a while .. did they actually buy them back, and now dumping again ? One thing though , Bill Gates was not doing any buying back of his shares . What a signal that was ... ;-)