Economic news — mostly good, some bad
July 31, 2003First the good news.
The U.S. economy grew faster than expected April-to-June, boosted by gains in business spending and government spending for the war in Iraq. Second quarter GDP rose at a 2.4% annual rate, faster than the 1.4% rate each of the previous two quarters. This was much better than Wall Street was expecting. (Dow Jones Newswires — Economy Grew at 2.4% Pace in 2Q on Increased Spending ; Reuters– Defense Spending Driving U.S. Economy)
More good news, on the job market, which has been the weakest aspect of the economy, and ultimately most politically sensitive.
First-time applications for unemployment benefits declined for a third week in a row last week, down by 3,000 to a five-month low of 388,000, with four-week average down by 11,750 to 408,750, also a five-month low. (Dow Jones Business News — U.S. Jobless Claims Decline for Third Straight Week)
Now the bad news:
Consumer confidence fell unexpectedly in July, supposedly shaken by a 9-year high in the unemployment rate. Consumer Confidence Index fell to 76.6 in July, nearly a seven-point drop from 83.5 in June. Analysts had expected a 1.5 percentage point increase. The decline was the largest since February, when confidence dropped 14 points to 64.8 during pre-war uncertainty regarding Iraq. (AP — July Consumer Confidence Falls Sharply)
I say the glass is still half full — confidence is still almost 12% higher than February, despite bad news on unemployment rate and postwar quagmire.
Plus, what you learn about consumer confidence apparently depends significantly on the survey.
According to an ABC News/Money Magazine poll released Wednesday, “U.S. overall consumer confidence broke out of its mid-July slump and posted an improvement last week.” (AP — Consumer Confidence Higher, Poll Says)
Finally, wisely pulling it all together (sort of) is Robert Samuelson in the Washington Post: “Gosh, the news seems good. . . . Why shouldn’t the economy get better? Well, here are a few reasons . . . . So the evidence is baffling. Still, most forecasters expect better economic growth. . . . One problem is that we don’t always know which numbers to believe. . . . Who knows? Everyone’s guessing. Confusion is the only honest conclusion. We may be on the verge of an economic turnaround, or not. If not, start worrying.”
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