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To: Mephisto who wrote (4583)	10/7/2002 7:46:14 PM
From: Mephisto	Respond to of 5185

Aid for a Flagging Economy "The Bush administration and the House are proposing to boost spending on homeland security but cut spending on higher education, job training, public housing, community health centers and child care. It is social spending, however,that most quickly alleviates the worst effects of an economic slowdown and stimulates the economy." October 7, 2002 latimes.com E-mail story EDITORIAL Here's the war report from home: Consumers have been in the trenches battling a double-dip recession with their own spending, but they may be starting to lose the struggle. Congress is caught up in the White House's obsession with Saddam Hussein, and neither the administration nor lawmakers are doing anything significant to battle the slump. Far from being isolated from the economy, a war with Iraq is linked to it. The prospect of war is increasing business and investor uncertainty. The Congressional Budget Office estimates that war could cost the U.S. as much as $9 billion a month. Oil prices could shoot up as well. The cost of reconstructing Iraq is unclear, but would be significant. Partly because of the threat of war, the U.S., Japanese and European economies are seeing a contraction in manufacturing demand. Businesses are taking a wait-and-see stance. The economic numbers are so anemic that normally they would be impossible to ignore. Last year, the number of Americans living in poverty increased from 31.6 million to 32.9 million. Median household income declined 2.2%. The ranks of the uninsured increased by 1.4 million, to 41.2 million. Car sales are slumping despite continued loan rate-cutting, and retailers are anticipating a dismal Christmas. Congress and the Bush administration should take more steps to increase confidence in the economy and to stimulate it, beginning with the corporate reforms that have somehow evaporated. The Bush administration has failed to back legislation requiring companies to report stock options as expenses, for example. Legislation to make 401(k) pension investments more worker-friendly is stuck in Congress; tough restrictions on offshore tax havens have gone nowhere. A handcuffed Andrew S. Fastow, former chief financial officer of Enron, doing the perp walk Wednesday makes a good photo op but doesn't fool investors. Nor has Congress put its own financial house in order. It keeps passing stopgap measures to avoid a government shutdown, but it hasn't approved any of 13 required spending bills. It's also the case that in the next five months, about 3 million workers and their families risk losing unemployment benefits unless Congress extends a temporary program providing extra weeks of benefits. The Bush administration and the House are proposing to boost spending on homeland security but cut spending on higher education, job training, public housing, community health centers and child care. It is social spending, however, that most quickly alleviates the worst effects of an economic slowdown and stimulates the economy. The White House and lawmakers need to give consumers some ammunition to fight against an economic downturn. Otherwise, all they'll be waving is a white flag. latimes.com

To: Mephisto who wrote (4583)	10/11/2002 8:21:21 PM
From: Mephisto	Respond to of 5185

US stocks surge despite gloomy consumer data "Retail sales have faltered during past recoveries without undermining them, as occurred after the 1990-91 recession. But the latest report reinforces concerns about the period between Thanksgiving and the new year, which generates roughly 70 per cent of US retailers' profits. Adding to that concern, the University of Michigan said its index of consumer sentiment fell for the fifth successive month in October, to a nine-year low of 80.4.." Friday October 11, 7:05 pm ET FT.com biz.yahoo.com By Peronet Despeignes in Washington and Deborah Hargreaves in London US retail sales fell last month at their fastest pace this year as consumer confidence sank to a nine-year low, according to reports released on Friday. Normally, such news would have dealt a severe body blow to faith in the US economy. But after weeks of downbeat reports on the economy and from retailers, investors were apparently braced for the worst, and US markets surged early on. The S&P 500 ended the day up more than 3.9 per cent, extending its biggest two-day rally since the aftermath of the October 1987 market crash. The Dow Jones Industrial Average and Nasdaq Composite were both up by more than 4 per cent. In Europe, shares had their biggest one-day rise since July, with London's FTSE 100 and Germany's Dax index rising by more than 5 per cent. But it was unclear how much of the rally was due to short covering, to positive news from General Electric and IBM and hopes economic conditions would not get much worse - or how long it would all last. The scope and size of the rally hinted at a possible bottom, but some analysts warned it could prove as fleeting as the many false dawns of the past year. "A lot of investors would regard this rally as a consolation prize and will use it to limit some of their losses which have been considerable," said Michael O'Sullivan, strategist at Commerzbank. In the US, the Commerce Department said retail sales fell last month by a seasonally adjusted 1.2 per cent, the first drop since May and the biggest since November 2001. Car sales led the retreat: excluding them, sales rose 0.1 per cent. However, the decline was broad-based, affecting restaurants, bars, groceries, furniture, electronics and clothes. Among 13 main categories, only three showed gains. Retail sales have faltered during past recoveries without undermining them, as occurred after the 1990-91 recession. But the latest report reinforces concerns about the period between Thanksgiving and the new year, which generates roughly 70 per cent of US retailers' profits. Adding to that concern, the University of Michigan said its index of consumer sentiment fell for the fifth successive month in October, to a nine-year low of 80.4. Optimists argue persistent income growth, low borrowing costs and a fledgling rebound in profits will support growth in investment, employment and spending. Pessimists fear borrowing costs, near 40-year lows, won't fall much further and that the stock market rout of the past few weeks, rising energy prices and fears of war and terrorism, will eventually sap the wherewithal and confidence of US consumers. Reflecting great uncertainty over the outlook, the US stock market's volatility over the past two months has been the highest of any 60-day period since the 1997-98 global financial crisis. Email this story