Posted on 08/01/2002 9:28:14 AM PDT by RCW2001
JEANNINE AVERSA, Associated Press Writer
Thursday, August 1, 2002
©2002 Associated Press
URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2002/08/01/national1100EDT0563.DTL
(08-01) 09:12 PDT WASHINGTON (AP) --
Manufacturing grew more slowly, construction spending fell to its lowest level in almost two years and new claims for jobless benefits went up, signs that the economy's road to recovery is hitting a rough patch.
The latest batch of economic reports released Thursday underscored the difficulties facing companies and workers amid an uneven recovery. And, they raised new questions about where the economy is heading.
On Wall Street, stocks sagged. The Dow Jones industrials fell 179 points and the Nasdaq was off 35 points in noon trading.
Manufacturing is growing sluggishly, with the Institute for Supply Management's index of business activity dipping to 50.5 in July from 56.2 in June.
The performance was weaker than the index reading of 55 that many analysts were predicting, but it still marked the sixth month in a row in which manufacturing activity flashed a growth signal. An index above 50 signifies growth in manufacturing, while a figure below that shows contraction.
"Did the manufacturing sector only hit an air pocket in July or did one of the engines flame out?" wondered economist Joel Naroff of Naroff Economic Advisors. "July seems to be shaping up as our month of discontent."
In another report, the Commerce Department said construction spending declined by 2.2 percent in June from the previous month. That pushed down the value of construction projects to $820.8 billion, the lowest level since August 2000.
Treasury Secretary Paul O'Neill, appearing Thursday on CBS' "The Early Show," said he remains optimistic about the economy, noting recent improvements in wages.
"We're bent on getting more people back to work and we need some action by Congress to give us some additional steps," O'Neill said, calling again for passage of legislation giving the president greater leeway to negotiate international trade treaties.
Construction activity was weaker in June than many analysts were expecting. They were forecasting a 0.3 percent rise. Construction spending dropped by 2 percent in May, a bigger decline than previously reported.
The weakness in June was led by a 3.4 percent cut in spending on commercial projects, including office buildings and hotels, by private builders. The government also scaled back spending by 3.1 percent, with cuts reported for industrial complexes, highways, schools and hospitals.
Spending on home building by private companies dipped by 0.9 percent.
And, in a third report, more Americans filed new claims for unemployment insurance last week.
For the work week ending July 27, new applications for job benefits rose by a seasonally adjusted 20,000 to 387,000, the Labor Department reported. That pushed claims to their highest level since the beginning of July.
The increase comes after claims fell sharply in the prior two weeks.
After bolting out of the starting blocks at the beginning of the year, the economy lost momentum in the spring, growing at an annual rate of just 1.1 percent. That was down from a 5 percent rate in the first quarter of this year.
Given the slowdown and continuing economic uncertainties, many economists believe the Fed will leave short-term interest rates at 40-year lows at its next meeting on Aug. 13. The Fed has held rates steady all year long. Growing numbers of economists predict rates will be left alone for the rest of the year.
In the jobless claims report, Thomas Stengle, a statistician with the Labor Department, cautioned against reading too much into the figures because they tend to bounce around a lot this time of year.
Auto plants temporarily shut down to retool assembly lines for new models this time of year. Difficulties in adjusting for these seasonal factors can distort the numbers.
The more stable four-week moving average of claims, which smoothes out weekly fluctuations, edged up last week to 386,000. However, the moving average has been below the 400,000 mark -- a level associated with weakness in the job market -- for seven straight weeks, an encouraging sign.
Nevertheless, the number of workers continuing to draw jobless benefits rose for the week ending July 20 -- the most recent period for which the information is available -- to 3.5 million, suggesting that companies aren't vigorously hiring.
Still, many economists believe that jobs growth for July will be sufficient to keep the nation's unemployment rate steady at 5.9 percent. But the growth in jobs probably won't be strong enough to bring the unemployment rate down for the month.
©2002 Associated Press
Plus, countless new "service jobs" and careers handling information have been created for Americans. As U.S. Chamber President Tom Donohue has pointed out, "it’s impossible to generate $200 billion in new trade without creating an enormous number of new jobs."
Of course a few eggs are broken, along with egos, when you bake a new cake. And while enhanced competition in the corporate marketplace has led to some American blue-collar job losses, the U.S. economy generated over 20 million new jobs in the 1990s. And many of the new, trade-related jobs that have been created exist outside dirty factories, and pay similarly than the manufacturing jobs that were lost. The biggest reason for any bad economic news today in America is due to the Sept. 11 terrorist attack, as well as the accounting irregularities discovered in a handful of US-based multi-national corporations. The Sept. 11 event caused Americans to act in a knee-jerk manner, and demand tighter borders. But the opening of the Mexican Border to Trucks, per the recent NAFTA Ruling is good for Americans. Built on an earlier Canada-U.S. free trade agreement, borders between the US and Mexico hardly exist in the traditional sense of the word. This is a good thing for corporations listed on the US stock exchanges because open border policies represented a departure for Mexico, which had historically been extremely protectionist. Free trade, free markets, and free enterprise have fed ongoing social changes and contributed significantly to Mexico’s democratization. Globalization will work if it is given time. But American isolationists and those longing for a return to a "manufacturing-based US" must let go of the old manner of problem-solving.
Another symbol manipulator heard from...
It's probably worse than this. There has been a consistent pattern of BLS reporting relatively benign unemployment numbers each month, only to quietly revise them downward in successive months. April's job creation went from something like 40,000 new jobs (announced in May) to 6,000 new jobs (revised in June) to 20,000 LOST jobs (revised in July). I'm trusting my memory here - don't have actual figures in front of me.
Wall Street stock analysts ain't the only ones lying to us!
Well, what else would you expect the ghost of history's greatest Socialist to say?
I'll wager that less than 2% of the US population even knows what "trade promotion authority" is, much less how fast-track will speed up globalization. And as for the critics here who sit in judgement of me, they should all be reminded that US Pres. George W. Bush also follows the dogma of globalization, free-trade and lowered barriers for corporate expansion.
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