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To: Jim Willie CB who wrote (21167)	6/27/2003 4:17:25 PM
From: stockman_scott	Respond to of 89467

Message 19067032

To: Jim Willie CB who wrote (21167)	6/27/2003 4:23:06 PM
From: stockman_scott	Respond to of 89467

the monetary hoser stands wide open bcaresearch.com bounce in secular dollar bear bcaresearch.com

To: Jim Willie CB who wrote (21167)	6/27/2003 4:31:42 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Consumers spend more as prices fall June 27, 2003 (Reuters) — U.S. consumer optimism faded in June as worries about jobs hurt confidence, but separate figures for the previous month showed spending had already picked up enough to promise faster economic growth. Falling prices helped boost consumption, but also suggested it was too early for the Federal Reserve to relax its guard against deflation even after this week's cut in interest rates to 45-year lows. The University of Michigan's survey of consumer sentiment dipped slightly in June, though that did not detract from the brighter picture on personal consumption provided by the Commerce Department. ``The spending figures were actually very strong for May,'' said Robert Mellman, senior economist at J.P. Morgan. He pointed to the booming housing market as one reason for the pickup, while noting that, in this case, falling inflation was a boon since it lifted spending in real terms. ``We know new home sales surged in May, so it's no surprise home-related spending is improving,'' said Mellman. ``And with interest rates down and tax cuts coming, we suspect it's not a one-month fluke but the start of something better.'' The figures had little obvious impact on financial markets, in part because investors were preoccupied with tidying up their portfolios for month and quarter-end. SPENDING MORE The University of Michigan survey of consumer sentiment dipped to 89.7 during June, unwinding some of May's big bounce to 92.1. But the final figure was somewhat better than the 87.2 reading taken early in June suggesting Americans became a little less pessimistic as the month wore on. Consumers' take on current conditions rose to 94.7 in June against May's 93.2, but future expectations deteriorated to 86.4 from 91.4. That outcome was exactly the opposite of sentiment as portrayed by the Conference Board survey of consumers, illustrating why analysts prefer to concentrate on what people actually do rather than what they say. Indeed, the improvement in spending belied consumers' apparent caution. On the face of it, spending was up only a slight 0.1 percent, but adjusted for falling inflation, real consumption rose 0.3 percent after a matching gain in April. The real number is what counts when economists calculate overall growth. May's rise meant real annualized consumption rose 2.7 percent on average this quarter versus a 2.0 percent rise in the first quarter. This should help overall economic growth this quarter outstrip the first quarter's paltry 1.4 percent pace. ``It's quite possible that second quarter GDP could be higher than anticipated — we could actually see something over 2 percent annual rate based on this report,'' said Sung Won Sohn, executive vice president and chief economist at Wells Fargo Bank in Minneapolis, Minn. chicagobusiness.com