economy remains lackluster
It's hardly surprising that Bushonomics are not exactly a spur to the economy...
The U.S. economy performed a little bit better in the first three months of 2003 than first thought, growing at an annual rate of 1.9 percent. But even with the improvement, the pace of economic growth was still lackluster.
The latest reading on gross domestic product for the January to March quarter shows the economy expanding slightly faster than the 1.6 percent growth rate estimated a month ago, the Commerce Department reported Thursday. The GDP is the broadest measure of the economy's health.
Carl Tannenbaum, chief economist at LaSalle Bank, said the economy needs to crank up growth to a rate of around 3 percent or higher to get back into a more normal growth pattern and get companies to really start hiring. "Until that happens, it won't feel much like a economic recovery to the average person," he said. [Emphasis added]
In a second report, new claims for unemployment benefits dropped last week by a seasonally adjusted 9,000 to 424,000, for the week ending May 24, the Labor Department reported. But even with the decline, claims were above the 400,000 mark, a level associated with a weak job market. [Again, emphasis added]
The number of unemployed workers continuing to collect jobless benefits, however, jumped by 83,000 to an 18-month high of 3.76 million for the work week ending May 17, the most recent period for which that information is available.
Federal Reserve Chairman Alan Greenspan (news - web sites), in a Capitol Hill appearance last week, predicted that economic growth in the current April-June quarter "is going to be quite soft."
Private economists agree. They don't think the economy will do much better than the first quarter. Forecasts for second-quarter economic growth range from a 1.8 percent rate to a rate of more than 2 percent. ...He said recent economic reports on employment and production have been "on the weak side." But improved conditions in financial markets and strong productivity gains — a key to the nation's long-term economic well being — augured well for the economy's future.
You've gotta be kidding me...overcapacity -- in the form of incredibly strong productivity -- is one of the things keeping the economy so soft. Businesses have little incentive to invest or create jobs -- tax breaks for the rich or no -- when they already have unused capacity, and when consumer demand is weak.
The new federal tax cut — a 10-year, $350 billion package of tax rebates, lower rates, new breaks for businesses and investors and aid to states — was signed into law by President Bush on Wednesday. It, too, is aimed at energizing economic growth.
Baloney. I don't think anyone really beleives that this package of gimmicks is really going to spur any growth; Bush's previous tax cuts, tilted overwhelmingly toward the wealthy, are hardly doing so. Besides, in order to disguise the true cost of the cuts, they pop up and disappear like some crazy whack-a-mole game, so there's little incentive to create jobs now. In this insane realm of supply-side economics, let's see how the consumers -- the ones who account for two-thirds of economic activity in this country -- are doing:
In the January-March, quarter, consumer spending increased at an annual rate of 2 percent. That was better than the government's first estimate of a 1.4 percent growth rate for the quarter and marked an improvement from the fourth quarter's tepid 1.7 percent growth rate. However, the 2 percent pace was still subpar.
Businesses, meanwhile, have largely restrained spending, a major factor preventing the economy from returning to full economic speed.
...Economists say that businesses will continue to be cautious until profits get stronger and they feel more confident in the economy's recovery.
Until then, businesses probably won't be in a rush to hire, meaning the nation's unemployment rate — now at 6 percent — probably will stay there or move higher in the coming months, economists say.
Needless to say, this is hardly encouraging to someone looking for work.