So yesterday, retail sales were up a modest 0.5%, the biggest gain in months. However, today, while deflation fears may have eased a bit with a slight bump (0.5%) in the CPI, industrial production remained flat at 74.3%, still the lowest point in over 20 years. On top of this, business inventories decreased 0.2%, when the market expected them to remain flat.
And then there was Alan Greenspan's testimony before Congress. While the Fed Chairman was generally optimistic regarding that incessantly promised 3rd quarter recovery, he sounded a familiar warning:
Greenspan Warns of Problems From Deficits
By MARTIN CRUTSINGER
AP Economics WriterWASHINGTON (AP)--Federal Reserve Chairman Alan Greenspan says that "substantial and excessive'' federal budget deficits--if not reduced--will hurt the economy's ability to grow strongly enough to reduce unemployment.
Greenspan, testifying Wednesday before the Senate Banking Committee, was more pointed in his criticism of soaring federal deficits than he had been in an appearance before a House panel on Tuesday, the day the administration announced its new projections showing a serious worsening of the deficit outlook.
"There is no question that if you run substantial and excessive deficits over time you are draining savings from the private sector, and other things being equal, you do clearly undercut the growth rate of the economy,'' Greenspan said, pointing to the area where economists believe deficits inflict the most harm.
Of course, the White House yesterday announced record deficits, which they couched as "not really that bad".
So, being the armchair economist I am, I really don't know what to say about the purportedly impending recovery. However, if history provides us with any insight into the future, it's not the growth in GDP, but jobs, which enables the re-election bid of any chief executive. So far, Bush has failed to meet his quota. And while yellow cake and aluminum tubes make great news headlines, I still suspect that it is the missing jobs, not WMDs, which will determine who resides in the Oval Office come January, 2005.
I hope you are right. It is hard to see where any sort of support for the incumbent will come from if millions are unemployed because of him.
Perhaps the rich will suddenly hire more servants, now they have the tax cut?
Posted by: Larry Lurex at July 17, 2003 05:40 AM