http://www.truthout.org/docs_03/010104J.shtml

Economic Reports Reflect Underlying Concerns
By Jonathan Weisman
Washington Post

Tuesday 30 December 2003

Consumer confidence, home sales and Midwestern manufacturing
all slipped below economists' expectations in reports released
today, amidst persistent concerns over the labor market and worries
that the economy's recent robust gains may be easing.

Sales of existing single-family homes dropped in November by
4.6 percent from October's level and were off even more from the
record level set two months earlier, the National Association of
Realtors reported. Midwestern manufacturing continued its expansion
this month, but at a slower pace than November's, according to the
National Association of Purchasing Managers' Chicago office.

And consumer confidence backed off its recent surge, as more
Americans expressed anxieties over business conditions and the
availability of jobs, said the Conference Board, a private research
group in New York.

"All three were a little bit weaker than expected, basically,"
said Jan Hatzius, a senior economist at the Goldman Sachs Group
Inc., who called the "fairly substantial decline in labor market
assessments" an "interesting and somewhat cautionary note."

The reports underscored two clouds hanging over the economic
recovery: improving but still sluggish hiring and a housing market
that may be losing steam after sustaining the economy through its
long doldrums.

"A true recovery is finally underway, which is good. Two years
into it and this is first time we can say that," said Jared
Bernstein, an economist at the Economic Policy Institute. "At the
same time, it's still a fragile one, and it still hasn't found
strong legs."

Consumer confidence in November was at its highest level in 14
months, but this month, it slipped back to an index level of 91.3,
from a revised November level of 92.5. The composite index is based
on a comparative level of 100 set in 1985.

Out of 5,000 households surveyed, the number saying jobs are
"hard to get" rose to 32.6 percent this month, from 29.6 percent.
The number saying jobs are "plentiful" slipped to 12.5 percent,
from 13.5 percent. Americans' appraisal of business conditions also
lost ground, according to the survey.

"Job worries continue," said Lynn Franco, director of the
Conference Board's Consumer Research Center.

That sentiment may reflect a disconnect that Americans feel
between the upbeat economic numbers trumpeted in the press and
their own experiences, Bernstein said. The economy grew at a
stellar 8.2 percent pace between July and September, but
inflation-adjusted wages rose a scant 0.2 percent over that period
and figures for the final quarter of 2003 are expected to show an
actual decline.

Job growth, while positive, has not been enough to drive up
wages or alleviate employment anxieties, economists say. And that
is likely to continue next year, as manufacturing and some service
jobs move overseas, according to an economic assessment released
today by retail bank Wachovia Corp.

"Employment gains will still underwhelm," concluded John E.
Silvia, Wachovia's chief economist.

Housing sales and construction, which boomed during the
overall economic slowdown, are finally showing signs of flagging,
economists also caution. Existing-home sales in November fell to an
annual rate of 6.06 million homes, from a pace of 6.35 million in
October.

Economists had expected sales to barely slow, to a rate of
6.33 million homes.

David Lereah, chief economist at the National Association of
Realtors, still called last month's sales "a very respectable
number."

But few economists believe the housing market can continue to
pull the economic train forward. "Home sales are clearly
weakening," Hatzius said. "For 2004, the question is not going to
be whether [housing] will be the locomotive. It's going to be how
big a brake will it be."

Taken together, the three reports were not enough to dampen
Hatzius' expectation of a strong, 4.3 percent economic growth rate
for next year, powered by demand for U.S. products abroad and a
strengthening U.S. business sector.

"It should be a good year," he said.

But Bernstein said the reports underscore his sense of
caution.

"Before these numbers came in, there were other reasons to
believe the recovery -- though far ahead of where it was a year ago
-- is still fragile," he said, "and these reports give succor to
that view."