> ------ Forwarded Message > From: [EMAIL PROTECTED] > Reply-To: [EMAIL PROTECTED] > Date: Thu, 1 Nov 2001 17:22:28 -0500 (EST) > To: [EMAIL PROTECTED] > > > This article from NYTimes.com > has been sent to you by [EMAIL PROTECTED] > > > After eight years of peace and prosperity comes the Republicans. As soon as > they get in, so comes the doom and gloom. It never fails. > > [EMAIL PROTECTED] > > > After 8 Years, U.S. Economy Finally Falters > > November 1, 2001 > > By DAVID LEONHARDT > > > > > The longest economic expansion in American history has > ended. > > The nation's economy shrank this summer for the first time > in more than eight years, the government said yesterday, > with businesses further cutting investment while consumers > increased their purchases only slightly. The terrorist > attacks of Sept. 11 played a key role, pushing an > already-weak economy over the brink, analysts said, as > travel temporarily stopped and spending briefly froze. > > "The recession has begun," Stuart Hoffman, the chief > economist of the PNC Financial Services Group (news/quote) > in Pittsburgh, declared. "The fourth quarter will show an > even deeper drop than the third quarter." > > President Bush, speaking to manufacturing executives > yesterday, said the new evidence provided yet another > reason for Washington to act quickly to pump money into the > weakening economy. "People are having tough times in > America," Mr. Bush said. "People are losing their jobs, and > I'm concerned about that." > > "My call to Congress is, get to work and get something > done," he added. > > In the three months that ended Sept. 30, the economy > contracted at an annual rate of 0.4 percent, after > adjusting for inflation. That is the only significant > quarterly decline since early 1991, when the last recession > ended, and the first drop other than a one-quarter downward > blip of 0.1 percent in the spring of 1993. > > While the nation will not officially be considered in a > recession until the downturn has continued for another > quarter, most analysts are now preparing obituaries for > what turned out to be the broadest and most enduring > expansion on record. > > Ten years of essentially uninterrupted growth, including a > boom in the second half of the 1990's, sent the stock > market to record levels, pushed the unemployment rate to > its lowest point in 30 years, produced unprecedented budget > surpluses, and caused some starry-eyed executives and > consultants to predict that recessions were a relic of the > past. > > In the last year, however, the economy has barely advanced, > and few analysts believe healthy growth will return within > the next few months because many companies still have more > machines and employees than they can profitably use. > > In hopes of shortening the downturn, the Republican-led > House last week narrowly passed a $99 billion stimulus > package, consisting mainly of tax cuts for businesses and > more affluent taxpayers. Treasury Secretary Paul H. O'Neill > yesterday used the latest economic data to press the > administration case for passing the stimulus measures. > > But Democratic leaders in the Senate, who met with the > president at the White House yesterday, say the House bill > will not adequately stimulate the economy because many of > the corporate tax cuts simply return money to companies, > rather than providing them with new incentives to invest. > > The Democrats hope to win Senate approval next week for > their own plan, which would offer greater benefits to > lower-income taxpayers and people who have lost their jobs. > > > The contraction in the third-quarter was less severe than > the 1 percent rate of decline many analysts had expected. > Stocks shrugged off the report. > > Bond prices soared yesterday, but that was attributed to > the Treasury Department's announcement that it would no > longer issue 30-year bonds, causing investors to scramble > to buy the existing supply. > > Consumer spending - which accounts for about two-thirds of > gross domestic output - rose slightly in the third quarter, > as pre-Sept. 11 increases outweighed the fall after the > attacks. Business investment in new buildings and equipment > fell sharply, but not as dramatically as in the second > quarter. > > Still, the overall economic picture looked grim. > > The > value of exports and imports each fell more than 15 percent > in the third quarter, for the first time since 1975, when > all of the world's largest economies were struggling at > once and companies were failing to find any healthy markets > eager to buy their goods. > > Since the beginning of 2000, the growth rate of consumer > spending in the United States has fallen to a meager 1.2 > percent from a robust 5 percent, as layoffs and falling > stocks have left people with more worries and less money. > > In the third quarter, spending on durable goods - > expensive, long- lasting items like cars and appliances - > grew just 1.7 percent, down from 7 percent in the previous > quarter. > > Even as consumers were cutting back, they received more > income largely because of the tax rebates the government > mailed over the summer. But most of that was saved rather > than spent. > > Meanwhile, business spending on equipment and software fell > 11.8 percent in the third quarter, placing the level below > where it was at the end of 1999. In the late 1990's, such > spending was growing more than 10 percent a year. Most > economists now blame companies' misplaced optimism and > zealous overinvestment during the final years of the boom > for the current collapse. > > The rapid cutbacks do offer one potential bright spot, > however, since many companies have already reduced their > costs and excess stockpiles significantly, clearing the way > for an eventual upturn. > > "We've had nothing but declining production, employment, > wealth and living standards all year long," Steven Wieting, > a senior economist at Salomon Smith Barney, said. "The only > good news is that we're fairly far along in the process." > > In all, the American economy produced $10.2 trillion worth > of goods and services in the quarter, the Commerce > Department said. > > Most economists do not expect growth to resume until next > year, with many predicting that it will be weak until at > least the middle of 2002, according to a survey by Blue > Chip Economic Indicators, a newsletter based in Kansas > City, Mo. > > The National Bureau of Economic Research, a group of > academics based in Cambridge, Mass., is generally > considered the official judge of the business cycle. With > employment having peaked in March, some analysts believe > that the bureau's recession-dating committee, when it > eventually meets to review month-by- month data, will > declare that a recession actually began before this summer. > > > Whatever the eventual date, the expansion of the last > decade will surpass the previous record of eight years and > two months in the 1960's. > > http://www.nytimes.com/2001/11/01/business/01ECON.html?ex=1005653348&ei=1&en=4 > 5035fbaad21ef55 > _________________________________________________ KOMINFORM P.O. Box 66 00841 Helsinki Phone +358-40-7177941 Fax +358-9-7591081 http://www.kominf.pp.fi General class struggle news: [EMAIL PROTECTED] subscribe mails to: [EMAIL PROTECTED] Geopolitical news: [EMAIL PROTECTED] subscribe: [EMAIL PROTECTED] __________________________________________________ >
