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To: calgal who wrote (4117)	11/15/2003 11:35:59 PM
From: calgal	Respond to of 6358

Re-Post: Economic confidence growing in Bay Area SURVEY: CEOS SEE A RECOVERY By David A. Sylvester Mercury News Confidence among Bay Area top executives in the local economy -- and their industry -- has risen to its highest level in more than a year, giving greater hope for future improvement, according to a new survey released Monday. ``This is a very good sign,'' said Sunne McPeak, president of the Bay Area Council, which conducts the quarterly survey. Rising confidence in the recovery is important because it usually means that businesses will invest more to expand production to meet increasing demand for their products. Among local executives, however, most are expecting a moderate recovery, not a strong, substantial one, according to the council's survey. In addition, they are worried about the erosion of the Bay Area's business climate, primarily because of the high cost of housing. The CEOs, particularly at large business with more than 10,000 employees, rated the Bay Area's climate as worse than California's overall and much worse than the nation's. McPeak said rising dissatisfaction with the business climate could become serious enough to threaten the recovery. Executives saw high labor costs as well as taxes as major problems, especially among the bigger companies. The survey was conducted among 515 CEOs and senior executives during mid-October by the polling firm Evans/McDonough and developed by McKinsey & Co. The Bay Area Council began the survey during the fourth quarter of 2001. False recovery This fourth quarter's confidence is measured by an index level of 60, which is the highest since the second quarter of 2002. The index is a number that represents the composite of answers to the survey questions. Business confidence rose then, during what proved to be a false recovery, and later sank for most of late 2002 and early 2003, according to the survey. It has risen sharply for two quarters in a row. Just as more executives are optimistic, fewer are pessimistic. In October, 64 percent of those polled believe the Bay Area's economy will improve over the next six months and only 6 percent believe it will deteriorate, the survey showed. Asked about their industry's prospects, 48 percent expected a moderate improvement and only 5 percent expected a substantial improvement. In addition, 40 percent expect the same conditions in six months. They are more optimistic for the Bay Area's economy overall. Among those polled, 60 percent are optimistic about a moderate improvement and 29 percent expect the same conditions. Bay Area improved At the same time, an increasing number of executives recognize that business has improved in the Bay Area over the past six months. In the survey, 40 percent said the local economy has improved moderately since the second quarter when only 8 percent said it had improved. Now, 48 percent said it is the same as six months ago, but in the summer, 41 percent said it was the same. Only 10 percent said it was moderately worse this quarter, compared with 44 percent during the second quarter who said it had become worse over the past six months.

To: calgal who wrote (4117)	11/15/2003 11:47:08 PM
From: calgal	Read Replies (1) \| Respond to of 6358

Economists see solid, if not spectacular, US growth into 2004 WASHINGTON, (AFP) - The US economy's blistering pace of growth in the third quarter is unlikely to continue, but most analysts see solid if not spectacular growth into 2004. story.news.yahoo.com AFP/File Photo Related Quotes DJIA NASDAQ ^SPC 9768.68 1930.26 1050.35 -69.26 -37.09 -8.06 delayed 20 mins - disclaimer Quote Data provided by Reuters The sizzling 7.2 percent pace in third-quarter gross domestic product may be a one-time event, economists say, but momentum should carry into the fourth quarter and well into 2004. A Wall Street Journal survey of 53 economists showed, on average, a prediction of four percent growth in the fourth quarter of 2003 and 4.1 percent growth in the first quarter of 2004. That pace, the survey found, is likely to hold at roughly 3.9 percent for the remainder of 2004. David Rosenberg, chief North American economist at Merrill Lynch, said the economy will get another dose of stimulus in early 2004 as more tax cuts kick in, with other factors providing tailwinds. "Come on -- it's an election year," he said. "And these have an uncanny ability to outperform non-election years by around 1.5 percent in terms of GDP (news - web sites) growth." He noted that tax refunds will provide the equivalent of a wage boost of 2,500 dollars per family. "And we'll likely get a pre-Y2K-style capex (capital expenditure) spree" as a result of business investment tax breaks. "All told, about half of next year's expected four percent GDP growth comes out of government stimulus measures," he said. Ethan Harris at Lehman Brothers said business spending is coming to the rescue of the economy as consumer spending begins to fade. "Coming out of the war in Iraq (news - web sites), there was a lot of concern that there would be a 'dropping of the baton' in the economy, with the consumer running out of gas before the business sector was up and running," Harris said. "It now appears that a smooth transition is taking place. ... The recovery looks increasingly balanced and sustainable." In one sign of renewed confidence, the University of Michigan consumer sentiment index rose to 93.5 in November from 89.6 in late October. Consumer sentiment is watched closely as a gauge of consumer spending, which represents about two-thirds of US economic activity. "Even though consumer (spending) is softening a little bit, consumers feel better about the future because job growth is picking up," he said. "Things can really get better on the spending side if confidence remains relatively strong." Meanwhile, Federal Reserve (news - web sites) officials have been increasing hints that they are in no rush to boost interest rates, in a move to ease concerns in financial markets that a rate hike could hurt business and consumer sentiment and crimp growth. Some Fed members have suggested that the "potential" US growth rate -- the pace of sustainable growth without sparking inflation -- could be as high as 4.5 percent, instead of the 3.5 percent benchmark used historically. Philadelphia Federal Reserve Bank President Anthony Santomero told a Fed forum in Washington that the US economy is gathering steam but that the job market is still lagging. "The recovery, tenuous at first, has finally begun to gain momentum," he said. "Third-quarter GDP was stronger than expected." Santomero said the Fed must look ahead to avert renewed inflationary pressures but noted that this was not a problem at present. "In light of significant excess capacity and benign inflation pressures, any policy adjustment need not take place in the near future," he said. The comments came as bond market investors have pushed up interest rates in anticipation of a tightening by the Fed as early as March 2004. But Robert DiClemente at Smith Barney said the Fed will be on hold until it is clear the economy is on a sustainable path. "The Fed's message to markets may continue to be 'get back' until they are satisfied that growth is not only self-feeding but that demand is sufficiently solid to root out any last remaining risk of deflation," he said.