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Treasury's O'Neill: Economy Recovering
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| September 8, 2001
| Reuters Staff
Posted on 09/08/2001 4:45:29 PM PDT by Lady In Blue
Treasury's O'Neill: Economy Recovering
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Saturday September 8 8:16 AM ET Treasury's O'Neill: Economy Recovering
Treasury's O'Neill: Economy Recovering
SUZHOU, China (Reuters) - Treasury Secretary Paul O'Neill said on Saturday the U.S. economy was on the road to recovery and he had not been surprised to see the monthly unemployment skip higher in August.
``I think the correction process is going on ... and that we're going to see a return to some much better rate of growth as we go through the year and into next year,'' O'Neill told reporters, suggesting the country was headed back toward a rate of gross domestic product growth above three percent.
O'Neill, in China for a meeting of Asia-Pacific finance ministers, said he was not surprised by the jump in the August unemployment rate to 4.9 percent -- the highest in four years -- but said that it was a lagging indicator and that other signs suggested growth ahead.
``None of us like the fact that more people are unemployed,'' O'Neill said. But he said anecdotal evidence of stronger orders and a liquidation of inventories were creating a basis for improved U.S. performance.
O'Neill repeated that it was critical for Japan, the world's number two economy which is teetering on the brink of recession, to take action to implement promised reforms aimed at bolstering its sagging growth.
``What (Prime Minister Junichiro) Koizumi and his aides have said they are going to do ... let's get on with it,'' O'Neill said on the sidelines of an Asia Pacific Economic Cooperation finance ministers meeting in the Chinese city of Suzhou.
O'Neill said there was no discussion of currency exchange rates on the first day of a two-day APEC meeting, a sensitive subject ahead of his visit to Tokyo next week, when Japanese officials are expected to raise the subject of the weakening dollar.
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FYI and DISCUSSION.
To: Lady In Blue
"prosperity is just around the corner".
To: Rustynailww
I believe O'Neill. I understand that he's a real genius with numbers. There's a poster on FR who knows him.I think he's a good guy and I trust him.
To: Lady In Blue
Though the evidence I see is anecdotal, it's been getting worse the last 2 months. I talk to people in transportation everyday, they say August was a horrid month and all the people I know in construction tell me it's getting worse.
To: GuillermoX
I know from their prospective,it looks bad,but I can't help thinking that O'Neill sees things that most of us can't.He's got the knowledge and contacts and experience.
To: Lady In Blue, Rusty
Actually, O'Neill is right. All the Fed presidents have been saying the same thing. The thing is, the economy does not move at one pace - it moves more like a chinese dragon which takes awhile to ripple to its end.
The sum final total summary of the economy is in its employment rate, not its GDP. The horrible jobless figures we are seeing are the tail end of the cow for a string of bad economic indicators. The ultimate LEADING indicator is the treasury yield curve (which has been in the right direction for awhile now - it was inverted just before the recession, and an inverted yield curve is always five flashing red lights signalling recession - despite people fooling themselves and saying it wasn't at the time) and whatever is going on in Australia/New Zealand. As it happens, Australia/New Zealand are the only countries on earth that are booming. Lucky thing, because they are the only leading indicators of the direction of our economy.
Mister O'Neill is right. And we are going to be all right. I am speaking as someone who has watched the markets intimately since 1994 and knows all this crap.
To: Lady In Blue
There's a reason I call him "Mr. Golden Age". It is not intended to be kind.
7
posted on
09/08/2001 5:42:20 PM PDT
by
J.B.
To: Anyone
What do you expect these guys to say?
"Yeah, looks like the economy is heading right down the toilet?"
The consumer has just begun pulling back. He has too much debt to continue the spending frenzy of the last few years. Needs to start saving again.
To: Lady In Blue
said he was not surprised by the jump in the August unemployment rate to 4.9 percent -- the highest in four years -- but said that it was a lagging indicator and that other signs suggested growth ahead. The stock market is a leading indicator.
9
posted on
09/08/2001 5:43:24 PM PDT
by
sarcasm
To: GuillermoX
I have been talking to people in the tech sector in seattle. They say it is the worst they have ever seen it. They forecast however, that it will bottom for tech in about six months. Many other parts of the economy will be fine before then. It will be horrible but if you can hang on for a few months, it will be better.
To: J.B.
I agree with you that O'Neill is a dunce. But guys like Fed's Parry and Fed's Moskow are NOT dunces and O'Neill is getting his information from them. They know what is going on.
To: The Kitten
The sum final total summary of the economy is in its employment rate, not its GDP. Here's what I don't get. The skid in the market on Friday was supposedly due to the released unemployment numbers. But meanwhile, hasn't the market already been reacting to all the big layoffs? I mean, when thousands of people get laid off, by definition, that means they become unemployed. So why the strong reaction to the unemployment numbers? Didn't everyone surmise this from the layoffs?
12
posted on
09/08/2001 5:47:04 PM PDT
by
Huck
To: sarcasm
The stock market does what the stock market is going to do and it is subject to bubbles and errors. It is not an economic indicator and a lot of people were pretty angry at mister greenspan for treating it like it was an economic indicator - they said it was none of his business and he should let it correct itself on its own.
The ultimate leading economic indicator is the treasury yield curve. It's moving in the right direction. The other leading economic indicator is the australian economy which is a perfect commodity basket - it's booming and when australia booms, the US follows. It's just an aussie peculiarity.
To: The Kitten
O'Neil still hasn't identified the real problem.Until he does, then he can jabber all he wants, but nothing will change.A major capital crunch doesn't come undone unless major changes are made.He is turning out to be a very poor Treasury Secretary, and may have to be replaced sooner than anticipated.
To: Huck
I think the market was reacting to the unemployment rate this time around because it indicated that all the laid off people were not able to find other work. I know that if i were laid off I probably would not even try to find other work in my field because there isn't any.
To: The Kitten
The yield curve is inverted at the short end, which is a very bad thing, so it isn't working in the economy's favour.When Fed Funds are higher than 3 month T-Bills, then we all have problems.
To: habs4ever
I agree that what you say is a serious problem - there are tons of venture cap firms sitting on cash right now and not wiling to lend but what change do you think has to be made?
To: habs4ever
Well, they don't convert to their proper shape all at once. I called my favorite chief bond trader and he told me it was getting there and far better than it used to be. The one thing I worry about is the potential collapse of the housing market, which lags even further than the employment rate as an indicator. They say there is a stubbornly persistent highness to real (as opposed to nominal) rates at the long end.
To: The Kitten
Really, you've watched markets since 1994? No doubt with that much experience and savvy , we should hang on every word.
To: masadaman
No, not you. Think the opposite and make all your trading decisions against what I say. It's what I want specially for you.
On Wall Street, 1994 is an enternity. The street is a young man's game.
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