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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (21793)	7/28/2002 10:45:04 AM
From: calgal	Read Replies (1) \| Respond to of 74559

07/28 07:27 Economic Growth Slowed in Second Quarter: U.S. Economy Preview By Vince Golle and Alex Tanzi Washington, July 28 (Bloomberg) -- Stock market declines and a slowdown in economic growth have damped U.S. consumer confidence, making companies reluctant to hire and restraining the factory rebound, reports this week are likely to show. Gross domestic product probably expanded at a 2.3 percent annual pace from April through June, following a 6.1 percent growth rate in the first quarter, based on the median of 59 forecasts in a Bloomberg News survey. The unemployment rate probably stayed at 5.9 percent last month, close to the 7 1/2-year high of 6 percent reached in April, economists said. Companies ``don't need to stretch and buy new machinery or hire new workers to meet their production, and that's not the basis for a solid recovery,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. ``Growth is still progressing, but there are worries about what will happen in the months ahead.'' People who have jobs keep spending because their incomes are rising, a report this week from the Commerce Department may also show. Consumer spending accounts for more than two-thirds of the economy and is underpinning the recovery. The Commerce Department will issue reports Wednesday on gross domestic product and Friday on personal incomes and spending. The Labor Department will report Friday on June employment. U.S. employers probably added 60,000 new positions in July, the same as in May and June combined, economists said. By contrast, more than 1.7 million jobs have been lost since the recession started in March 2001. Corporate Caution Executives remain cautious about the pace of growth, an Intel Corp. official said this month. ``We were expecting to see an economic recovery in our business, and right now, we see no signs of it,'' said Andy Bryant, Intel's chief financial officer, in an interview July 16. The world's biggest semiconductor maker said it planned to cut 4,000 jobs as sales declined to $6.32 billion in the second quarter. Intel last month said corporate demand for personal computers isn't picking up. ``My guess is most CEOs will wait until they're confident of a recovery before starting to spend,'' Bryant said. Manufacturing probably grew in July at a slower rate than in the previous month, a report Thursday from the Institute for Supply Management is expected to show. The group's factory index probably fell to 54.9 this month from 56.2 in June. Weak Stocks, Confidence A reading above 50 signals expansion, and the index has exceeded that threshold since February. A separate report from the Commerce Department on Friday will probably show orders placed with U.S. factories fell 1.7 percent in June, reflecting reduced demand for computers, communications equipment and metals. Confidence in the economy may be declining because the stock market is flagging. The Dow Jones Industrial Average has fallen 22 percent from its March high. The Conference Board's consumer confidence index probably fell to 101.5 in July, the lowest reading since February, from 106.4 in June, economists said. Spending hasn't waned with confidence. Outlays by consumers jumped 0.6 percent in June, economists say the Commerce Department's report is likely to show on Friday. ``Our interest is actually what people do, not what they say,'' Federal Reserve Chairman Alan Greenspan told Congress on July 17. July auto sales are expected to be 4.8 percent higher than a year ago, helped by the resumption of zero-interest loans, according to Luckey Consulting Group Inc. Fundamentals `Very Good' ``The fundamentals of the economy are absolutely very good,'' said Michael Jackson, chief executive of AutoNation Inc., the largest U.S. retailer of new and used cars, in an interview with Bloomberg Television last week. ``The equity market situation has still not affected the American consumer's appetite to buy.'' Personal incomes probably increased by 0.5 percent in June, the Commerce Department's report Friday may show. The last time incomes rose that much was in January. Other reports this week: -- On Wednesday, the National Association of Purchasing Management-Chicago is expected to report a July factory index of 56.5, down from 58.2 in June. -- The Labor Department will probably report on Thursday that first-time jobless claims rose to 375,000 in the week that ended Saturday from 362,000. -- Also on Thursday, the Commerce Department will probably report a 0.2 percent increase in June construction spending. quote.bloomberg.com