Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (2287)	3/1/2003 12:54:01 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 10065

Economists get more mixed signals WASHINGTON (Reuters) — The economy grew at a 1.4% annual rate in the closing quarter last year, the government said Friday, twice the previously estimated pace, as businesses rebuilt inventories and consumers spent more than thought. While the Commerce Department report showed fourth-quarter GDP growth remained modest and another report showed consumer confidence in a shaky state this month, the data were not as soft as feared and implied underlying economic strength once Iraqi war worries lift. "(It) lends credence to the belief that, absent that Iraq crisis, businesses would likely be spending more vigorously and helping shift the economy into a higher gear," said economist Bill Cheney of John Hancock Financial Services in Boston. White House spokesman Ari Fleischer said the gross domestic product report offered mixed signals, and said President Bush continued to believe his $695 billion tax-cutting economic stimulus plan was needed. "The president still would like to have the economy recover faster to create more jobs for the American people," Fleischer said, "There remain mixed signals in the economy." One of those mixed signals came from the University of Michigan, which said on Friday its closely watched survey of consumer confidence dipped to its lowest level in nine years. Fears about potential war, terror attacks and job losses helped push the consumer sentiment index down to 79.9 in February — the lowest reading since September 1993 — from 82.4 in January. Because economists assume fearful consumers may rein in spending, a prolonged dip in consumer confidence would be a worrisome portent for expansion. Still, the better-than-expected data shored up the U.S. stock market though the rally fizzled by midday. Stocks finished slightly higher Friday, although down for the week. The pattern of GDP growth in 2002 was uneven, rising at a brisk 5% annual clip in the first quarter, falling to 1.3% in the second quarter, back to 4% in the third quarter and slowing once more in the closing quarter. During the full year 2002, GDP expanded 2.4% after anemic growth of 0.3% in 2001 when the economy was in recession. GDP measures the value of all goods and services produced within U.S. borders. The revised fourth-quarter GDP figures showed businesses spent at the fastest rate in two years to rebuild inventories. Inventory spending was at a $24.7 billion annual rate in October-December — the strongest since a $59.9 billion addition in the fourth quarter of 2000 — and a huge upward revision from the $3.3 billion gain estimated a month ago. "As far as inventories go, there could be some involuntary buildup ahead of a possible war," said economist Alan Ruskin of 4CAST in New York. "If there is a message ... it's that once your strip out autos, there has been fairly steady underlying growth of about 2% over the past few quarters, and that is what I expect to continue." The department also revised up its estimate of consumer spending to show a 1.5% rate of increase in the fourth quarter instead of 1.0%. Consumer spending fuels two-thirds of national economic activity, so the change underlined potential residual strength once war worries ease. Business investment in new equipment and software surged at a 6.6% annual rate in the fourth quarter. That was sharply ahead of a previous estimate of a 5% rise and the third straight quarter that such investment has grown. Separately, the National Association of Purchasing Management said Friday its index of manufacturing activity in the Midwest softened slightly in February to 54.9 from 56.0 in January. But that too painted a mixed picture, with new orders and inventories firming, a positive signal for the future, but order backlogs weaker in February. Tim O'Neill, chief economist for the Bank of Montreal in Toronto, said the prospect remained for relatively lackluster growth in the first six months of 2003 while the Bush administration jousts with reluctant allies over whether to disarm Iraq by force. But once that issue is settled, peacefully or through war, and assuming some version of the administration's economic stimulus plan becomes law, O'Neill said prospects were for a much more robust second-half GDP performance as business apparently position themselves for a pickup. "In my view, economic fundamentals are strong and a combination of strong monetary stimulus (in the form of low interest rates) and the boost to manufacturing from a cheaper U.S. dollar will give us GDP growth of four to 4-1/2% in the final six months this year," O'Neill predicted. --------------------------------------------------------------------------------