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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Krowbar who wrote (486912)	11/4/2003 8:37:34 PM
From: sea_biscuit	Respond to of 769670

This is what John Crudele writes about the latest GDP numbers in New York Post (by no means a liberal paper). NATION'S GDP WON'T LOOK SO GOOD IF JOBS NUMBERS FALL SHORT By JOHN CRUDELE /November 4, 2003/ -- NOW all we need are some jobs. A million or so would be nice. The announcement last week of the gaudy 7.2 percent annualized growth in the third-quarter gross domestic product was nice. The economy was humming - at least during the last three months. Especially pleasing was the way that one stat - standing out as it does against a gain of half that much in the previous quarter - suddenly sent shock through the Democratic presidential contenders and had the White House publicly doing high-fives. Elected officials, of course, will get a sense of the public's mood today when voting is concluded on some lesser elections. But the truth is that neither political party should be overreacting to the 7.2 percent growth. You wanna know what's really happening with the economy right now? It's growing. But once you take out all the extraordinary, one-time items that created the third-quarter boom, the expansion is probably no better than it has been for the past few years. So, back to the question of jobs. This Friday the U.S. Labor Department will tell us precisely how many new jobs it thinks were created - or lost - during the month of October. Whether it's an encouraging number or not, remember that the figure is fraught with guesses. Wall Street is predicting that about 50,000 to 75,000 jobs were created last month. That would be in the vicinity of the number of new jobs that showed up in September and would be a measurable improvement over earlier this year, when the job count was contracting. While appreciated, 50,000 new jobs is pathetic when you consider all the stimuli that Congress and the White House have provided (through tax incentives) and all the monetary punch that the Federal Reserve has been providing (through low interest rates). If the economy was truly growing at a 7.2 percent annual pace - and companies expected that pace to stick - the country would be producing between 300,000 and 400,000 jobs each and every month. That isn't happening. Why? The Republicans would like to believe that some weird force has suddenly taken over corporate executives and made them timid. With corporate profits up, the stock market rising and interest rates low, it is reasonable to assume companies would be creating jobs. Treasury Secretary John Snow said so himself two weeks ago when he all but promised job growth by the end of the year. But there could be another reason for the hesitancy on the part of businesses to borrow, spend and get people back on the payroll. And that's simply that they still don't trust the economy's stability. Put a different way, they think the 7.2 percent growth was a fluke. Here is why they might believe that. The experts say if you take out the $35 billion in tax cuts provided in the quarter and remove the $40 billion that home refinancing provided, the economy would have grown only around 3 percent. That's a bad omen for the last three months of the year, because the next set of tax cuts doesn't kick in until early next year and because home refinancings are slowing dramatically because borrowing costs are up. Worse, salaries are down. There are signs that consumers aren't as interested in spending their own dough as they were when Washington was giving them money to use. Even that 3 percent growth is suspect, since Washington makes adjustments to the GDP calculations that would put even mob accountants to shame. Specifically, the government is expert at understating the amount of inflation, which directly adds to the economic expansion. The main surprise in the third quarter, economists say, is that consumers spent 80 percent of the tax incentives they received. Many people had expected them to use much of the money to pay off debt - which, while prudent, would have been a disaster for the economy. The next few months will be intriguing. If the third-quarter growth holds, the Bush administration can finally relax. If not, the next 12 months will be tense.