Strong Growth for US Economy
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| Mon, 04-19-2004 - 12:20pm |
WASHINGTON (CBS.MW) -- The U.S. index of leading economic indicators rose 0.3 percent in March, the Conference Board reported Monday.
Last month's growth rate was as expected, matching the increase that economists had anticipated, according to a survey conducted by CBS MarketWatch. See Economic Calendar.
The leading economic indicators index was flat in February.
"Economic growth in the first quarter was strong and the second quarter may be as good or better," said Ken Goldstein, economist for the Conference Board. Read the full release.
In March, six of the 10 leading indicators improved: vendor performance, money supply, jobless claims, building permits, orders for consumer goods and consumer expectations. The other four -- interest-rate spreads, stock prices, manufacturing hours and core capital goods orders -- declined.
Over the past six months, seven of the 10 indicators have improved. "The current growth rate of the leading index is signaling a continuation of relatively strong economic growth in the near term," the Conference Board said.
In March, the coincident index rose 0.2 percent, led by the rise in payrolls. The lagging index fell 0.1 percent.
The leading index report "is useful because it collapses everything in about the economy into one simple number," said Robert Brusca, chief economist for Fact and Opinion Economics. "It is useless for the same reason."
Most of the data in the LEI report have been released previously; some of the data were on an estimated basis until final government data are released.
Rex Nutting is Washington bureau chief of CBS.MarketWatch.com.

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I think I have posted this before,
Lopsided trends in profits and wages threaten to topple growth
The rise in the stock market over the last year reflects spectacular growth in profits but not a generally healthy economy nor sustainable growth. Profits have never fared better, nor wage and salary income so poorly for this period of the business cycle. Since the last expansion ended in the first quarter of 2001, corporate profits in the United States have expanded by 57.5%. Meanwhile, private wage and salary income has contracted by 1.7% and total labor compensation has increased by a meager 1.5%.
This imbalance is potentially bad news for the economy. Labor compensation is more likely to be converted to demand for domestic production and fuel a sustained growth spiral. In contrast, when income goes to corporate profits, a larger share is likely to be spent abroad (on imports or investments abroad) or to pay down debt.
Corporate profits grew from $635 billion in the first quarter of 2001 to exactly $1.0 trillion in the latest quarter of available data (the fourth quarter of 2003). In the eleven quarters after the peak of the previous eight business cycles (going back to 1948), profits rose by an average of 14% and never more than 21% (see Figure 1). Had profits grown at the average pace of the past, they would have been $278 billion lower.
The graphs at this cite are worth a visit.
http://www.epinet.org/content.cfm/webfeatures_snapshots_04122004
1. The Labor Dept "revised the January and February payroll numbers upward, with job gains of 159,000 and 46,000, respectively, compared with the initial reports of 97,000 and 21,000."
2. The household survey, which has been showing a consistently rosier jobs picture than the employer survey, is becoming a better gauge because of the increase in the number of people who are self-employed.
http://msnbc.msn.com/id/4759094/
3. The business survey counts people who have changed employers in a given month twice. Ordinarily it's not a significant factor because the percentage of people changing jobs is consisent each month. However, when unemployment increases and people are worried about the future job market, they tend to hold on to the job they've got rather than jump into a potentially risky situation, so the percentage of people who have been double counted, starts to go down which makes the unemployment figure go up eventhough those poeple are not unemployed.
Renee
Where I live it appears as though the job growth is picking up marginally, but hopefully there will be some improvements in the future.
I dont care who is in office. I am happy when the economy is doing well regardless, and more people can go back to work.
Speaking of debt..........
http://www.suntimes.com/output/news/cst-nws-credit20.html
WHO'S IN DEBT
Amount of debt, by household income,
of those carrying credit card balances:
Less than $20,000: $1,377
$20,000-$29,999: $3,314
$30,000-$39,999: $3,846
$40,000-$49,999: $2,240
$50,000-$74,999: $4,317
$75,000-$99,999: $7,896
$100,000 or more: $2,944
Gallup poll of 1,014 adults, April 5-8, 2004
Most not worried about dangers of credit card debt .
About half of Americans with credit cards say they owe money on that plastic. But like a nation of Alfred E. Newmans, we've got a "What? Me Worry?'' attitude about debt.
The average hole for those carrying a balance is $3,815.
When asked by Gallup pollsters if they are concerned about not be able to make the minimum payment, only 17 percent say they are "very'' or "moderately" worried.
The Gallup poll also finds:
*The percentage of people who always pay the full amount monthly has dropped a few points since 2001. In the most recent survey (of 1,014 adults nationwide) 37 percent said they pay up in full every month, down from 42 percent in 2001. Some 16 percent say they "usually'' pay the full amount.
*Those with a household income of $75,000 to $100,000 carry the most debt -- about $7,896. As a percentage of their paycheck, those making less than $20,000 have the highest burden: Their debt is about 14 percent of their annual household income.
*The average number of cards held is 3.8. That is about the same as in Gallup's two previous credit card surveys, in 2001 and 2002. About one in five say they do not own any cards.
Credit card debt carriers are in for a "sticker shock,'' warns Robert Manning, author of Credit Card Nation and the coming Give Yourself Credit. Misunderstood by many consumers, a lot of new credit cards carry variable rates, which escalate as overall interest rates increase. A year from now "people are going to be unprepared when the rates go up,'' predicts Manning.
Too many people don't understand how credit works -- an ignorance by design, Manning charges. Banks and businesses profit mightily from it -- credit cards earned a reported $30 billion last year. "The best customer is the one who never pays off'' debt, he said. And the government wants consumers to keep spending to keep the economy active.
The middle class is paying more for housing: 30 years ago, shelter took up about 30 percent of one's income; today, it's 43 to 46 percent. But we haven't cut back on other spending to compensate, said Manning, a professor at the Rochester Institute of Technology in Rochester, New York.
In DuPage County, Glenn Dagenais sees middle class credit card problems as a financial specialist in the Wheaton office of Metropolitan Family Services. He says credit card companies have been lowering monthly minimums, once 4 to 5 percent of the debt owed and now as low as 2 percent. "At that rate, the debt never gets paid off,'' he said. Consumers think they're in good shape as long as they make the minimum payment.
"People don't understand what carrying debt does to their bottom line,'' he adds. "Carrying $10,000 costs about $2,000 a year.''
A bump in the road -- it could be the loss of a job but also merely the lowering of sales commission rates -- can put middle class families into trouble. They begin to use their credit cards to make up the difference in income, Dagenais said. "They're living on the edge.''
Consumer debt on the rise.
http://www.newbritainherald.com/site/news.cfm?newsid=11356977&BRD=1641&PAG=461&dept_id=10110&rfi=6
When consumer debt in America topped the $1 trillion mark this month, economists started asking themselves if personal spending could keep the economy afloat.
Roger Whelan, resident scholar at the American Bankruptcy Institute in Alexandria, Va., thinks he’s spotted an alarming trend.
"Consumer debt has doubled in the past 10 years, excluding mortgage indebtedness," Whelan says, "while personal savings has decreased from 5.8 percent to 2 percent in the past 10 years."
Considet that from September 2002 to September 2003, a record 1.66 million, or 1 out of every 73 households, filed for personal bankruptcy.
A bankruptcy attorney and judge for 40 years, Whelan says most bankruptcies occur when people get divorced, face unexpected medical bills or lose their jobs.
Consumers who use their credit cards during such emergencies suddenly find they can’t pay their debt.
Whelan believes personal bankruptcies will exceed 1.7 million in 2004, as offshore outsourcing slows job growth in the United States.
However, Peter Gioia, economist for the Connecticut Busi-ness & Industry Association, views outsourcing differently. He warns that several committees of the Connecticut General Assembly are considering bills that will harm the state’s economy by imposing protectionist measures.
"Congress is also considering measures that would slow the flow of jobs going offshore by imposing regulations to prevent companies that outsource from obtaining government contracts," he says. "These measures could damage the economy and hurt Connecticut more than other states because of the high number of jobs here that are vulnerable to overseas outsourcing, including jobs in technology, and financial and business services."
Gioia says the greatest importer of jobs is not India or China, but the United States. He points out that roughly 1,200 foreign-owned companies have decided to invest in Connecticut, employ our residents, set up operations and pay taxes here. He cites German-owned companies Bayer Corp. in West Haven, Trumpf Inc. in Farmington, and Leipold Inc. in Windsor that have set up manufacturing or research and development operations, creating jobs in Connecticut.
"Protectionist measures would send the wrong message to companies like these that have invested heavily in Connecticut," he says.
Another 'cheery' note...........
Inflation Makes A Comeback
http://www.time.com/time/magazine/article/0,9171,1101040426-612374,00.html?cnn=yes
In a surprise development, the government reported last week that consumer prices jumped 0.5% in March, or 6.2% on an annual basis, reminding us of the days when double-digit inflation had everyone clipping grocery coupons. In case you don't remember, here's a quick refresher on what inflation means to you.
--Is inflation back?
Yes. Technically, it never went away. Consumer prices creep up a bit every year. But for the past couple of decades the annual rate hike has been falling — to just 1.7% in the past 12 months. Now the rate of increase is rising. It should exceed 2% this year and reach 4% to 6% over the next five years.
--What will get more expensive?
Health care and education are inflation's mainstays, and gasoline has been going up for a while. But in March, the prices of hotels, clothing, airline tickets and used cars all showed big jumps. Next to climb will be anything tied to raw materials, the prices of which have been on a tear (see YOUR TIME, page 148). Nails, envelopes, paper clips, wallboard and such foods as cereal and meat should reflect the pinch soon. Services from gardening to accounting will probably cost more later.
--Is this good or bad news?
If you're out of work, it's a positive sign. Rising prices signal renewed economic vigor and a healthier job market. For everyone else, inflation is a serious pocketbook drain. Wage increases aren't likely to keep pace initially, and rising loan rates will further cut your buying power. Mortgage rates have already begun edging higher. Pretty soon we'll have to say goodbye to five-year, 0% car and truck loans.
--Can anything be done about it?
Not a lot. But few foresee true runaway inflation like that of the '70s. Global competition is a potent antidote to big price increases. Meanwhile, shop smart. The Internet makes price comparisons on cars, airline tickets and many other things easy, and if the price of apples goes up, try oranges.
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