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

To: TobagoJack who wrote (40754)	11/3/2003 8:48:30 PM
From: elmatador	Respond to of 74559

<<A day after the government reported that the American economy had grown in the third quarter at its fastest rate since 1984, another report hinted that this growth might not be sustainable, even in the short-term.>> Jay, I'm not going to comment you know what this points to. We have to keep our wallets deep in the pocktes, this campaign only will end with after the next presidential electon. WHAT TO WATCH The Rocky Road to Recovery A day after the government reported that the American economy had grown in the third quarter at its fastest rate since 1984, another report hinted that this growth might not be sustainable, even in the short-term. A preliminary report on the third-quarter gross domestic product showed on Thursday that the economy had expanded at an annual rate of 7.2 percent, up from a 3.3 percent rate in the second quarter. But on Friday a report on personal income and spending, the lone negative report from last week, showed that consumer spending had dropped an unexpected 0.3 percent in September. This was the first dip since February and could temper Wall Street's expectations. The American economy is heavily dependent on consumer spending, and unless job growth picks up to make up for the reduction in spending, the third quarter will be a tough act to follow. The fall in spending may also be a sign that the recent tax cuts have fully wound their way through the system, said Stephen P. Zeldes, chairman of the economics subdivision at the Graduate School of Business at Columbia University. "Stronger spending and lower savings in the long run depend on a high amount of savings." And a lack of savings may have caught up with the American consumer, Mr. Zeldes said. According to the report, household savings fell 0.6 percentage point in September. While the effects of low savings can be offset by a borrowing-friendly environment much like the current one, he said, "it is unsustainable in the long run." To be noted, though, is that low savings can be counterbalanced by high stock prices. "Ultimately what matters is wealth," said Haseeb Ahmed, economist at Economy.com. "Strong equity markets reduce the need to save out of disposable income." There is much debate over whether there is an optimal level of savings a country should achieve. While the United States has the lowest rate of personal savings among large industrialized nations, it is by far the front-runner in terms of economic growth. So while the markets are humming along nicely, Mr. Ahmed said, consumers, at least wealthy ones that are able to invest, should be able to keep the economy chugging while having fewer dollars tucked away. This week, much like the last, is filled with economic news. The highlights include a report on September factory orders on for Wednesday and a preliminary report on third-quarter productivity on Thursday. Topping everything off on Friday will be the all-important report on the October employment situation. While analysts expect job growth to pick up, many still think it will be a couple of months before significant gains are seen here. - Zubin Jelveh <mailto:jelveh@nytimes.com>, NYTimes.com