Fwd: [PEN-L:2799] BLS Daily Report

Doug Henwood dhenwood at panix.com
Tue Feb 2 09:02:37 PST 1999


The U.S. economy continued to outpace expectations, logging growth of 5.6 percent at an annual rate in the last 3 months of last year. The Commerce Department says solid consumer spending, business investment in equipment, home building, and an improvement in exports lifted gross domestic product to the strongest growth rate since the second quarter of 1996, when it advanced 6.1 percent. ... One measure of inflation, the GDP chain price index, increased 1.0 percent for the year - compared with 1.9 percent in both 1997 and 1996 - which made it the smallest increase since the index rose 1.0 percent in 1959. One has to go back to 1950 for a lower gain, when it rose 0.9 percent. ... (Daily Labor Report, page D-3). __The United States last year achieved the best combination of strong economic growth, low inflation, and low unemployment in more than 3 decades. ... The unexpectedly strong quarter pushed growth to 4.1 percent since the end of 1997, the largest such increase since 1984. Moreover, shortly before the end of the year, the economic expansion that began in April 1991 became the longest in U.S. peacetime history. ... Economists attributed the exuberant growth to a combination of influences, including low inflation, low interest rates, low unemployment, and a spending spree by consumers emboldened by fatter paychecks and stock portfolios. ... (Washington Post, Jan. 30, page A1). __A year of pleasant economic surprises ended with the biggest one of all: a last minute burst of growth that surpassed even the most bullish predictions. ... 1998 was the third consecutive year that the economy had expanded at a nearly 4 percent pace. For all of 1998, the GDP increased 3.9 percent. ... (New York Times, Jan. 30, page A1). __The U.S. economy charged into 1999, suggesting that it will remain resistant to financial turmoil abroad for the foreseeable future. ... The report also showed that two of the economy's weak spots in 1998 - manufacturing and exports - appeared to be turning around. ... (Wall Street Journal, page A2).

The U.S. economy continues to confound experts, surging when many expected it to cool. "This economy is the wonder of the economic world," Robert Dederick, consultant with the Northern Trust Co., tells the Bureau of National Affairs. "This is rewrite the [economic] textbook time. While the consumer continues to buy as if there is no tomorrow, the housing market is rip-roaring, and inflation is in check. It's a central banker's dream in a world that is a central banker's nightmare." ... Analysts interviewed still expect the economy to slow soon, but that are surprised at its vitality in this longest peace-time expansion in U.S. history. Most of the data released in January involved economic conditions at the end of the fourth quarter of 1998. But the strength of December and a January consumer confidence level near a historical high indicates strong momentum going into the new year. ... "The most notable report was the employment report," said the chief economist with Daiwa Securities America. ... Among the surprises, the employment report showed job growth at a robust 378,000 in December, and an unemployment rate, at 4.3 percent, that has not been lower in 30 years. "We think January is going to be a strong employment report, but not s strong as December," the senior economist with Macroeconomic Advisers in St. Louis said. Jobs supply the fuel for spending, and spending has driven this expansion. ... (Daily Labor Report, page D-1).

The January unemployment rate, due out Friday, is forecast to be 4.4 percent according to the Technical Data Consensus Forecast in The Wall Street Journal (page A6). The December unemployment rate was 4.3 percent. Nonfarm payrolls are expected to increase by 180,000, compared with a rise of 378,000 in December.

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