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

To: TobagoJack who wrote (31033)	4/8/2003 4:06:27 AM
From: elmatador	Respond to of 74559

Recovery or Recession? April 07, 2003 The stock market's daily fluctuations show how much investors have become sharply focused on the war in Iraq, but Wall Street is obviously keeping its eye on the economy as well. On Friday, the government reported that the economy lost 108,000 jobs last month, adding to the 357,000 lost in February. The unemployment rate remained at 5.8 percent in March, largely because of a rise in the number of people who are not looking for work and are thus considered to be outside of the labor force. Since the nation's payrolls peaked two years ago, employment has fallen by almost 2.4 million jobs. The unemployment figures followed Wednesday's news that factory orders fell by 1.5 percent in February, the steepest decline in five months. A survey by the Philadelphia Fed, also released last week, showed deteriorating conditions in several areas. Companies in the region reported that new orders and hiring fell sharply in March and that its broadest measure of manufacturing conditions had plunged. "The economy has appeared to hit a soft spot," Chris Varvares, president of Macroeconomic Advisers, a research firm in St. Louis, told The New York Times. "The $64,000 question is how much of that is due to the war and how much is due to underlying weakness." William C. Dudley, chief United States economist at Goldman Sachs, seemed to weigh in on that question when he told The Times: "We have had three consecutive quarters of below-trend growth. To explain all that on the basis of the war in Iraq seems to be a stretch." The series of discouraging reports has raised worries that the United States is close to slipping back into a recession. But the Federal Reserve has already cut short-term interest rates 12 times since the beginning of 2001, leaving them at their lowest levels since 1961. And Alan Greenspan, the Fed's chairman, has said that geopolitical uncertainties are a major part in the "soft spot," indicating that the Fed believes businesses and consumers will start spending again once the war in Iraq is over. That remains to be seen, but this week investors can get a good look at what consumers are thinking and doing. On Friday, watch for the April consumer sentiment survey by the University of Michigan. Last month's report, before the war began, showed consumer sentiment was at a nine-year low. Also on Friday, the government will report on retail sales for March. Recent reports have seen car sales, airline travel and retailers' expectations decline leading up to the war. - Mike Porath <mailto:porath@nytimes.com>, Business Producer, NYTimes.com