Good News Finally Hits (Editorial)

Several recent reports suggest the nation’s economy is well into recovery. The revised gross domestic product, released by the Commerce Department, showed the economy steaming ahead at an 8.2 percent annual rate in the third quarter, the fastest pace since 1984.r

Even better news was that it showed an 18.4 percent growth in investment by business on new computer equipment and software, less severe cuts in companies’ inventories, a pickup in exports and a slowdown in imports.r

Corporate profits in the third quarter were up 10.6 percent. The stock market has been up since March. A poll of business economists by the National Association for Business Economics said business spending and exports will boost growth in 2004. The professional forecasters expect GDP growth to rise to 4.5 percent in 2004 from about 3.0 percent this year.r

A survey of 34 forecasters by the Philadelphia Federal Reserve Bank suggested the same thing, predicting GDP growth of 2.9 percent this year and 4.3 percent next year.r

The National Retail Federation said holiday sales should increase by 5.7 percent this year.r

Throughout most of the slowdown, consumer spending, which accounts for two-thirds of the total economy, has kept the economy alive and economists have worried over how much longer that can continue given the debt that’s being piled up. Low interest rates certainly helped. While consumer spending might be slowing, the good news is that the NABE panel sees business spending up 10 percent next year.r

If there’s a downside, it’s that nearly all agree that growth in employment will be slower. With a current jobless rate of 6 percent, the NABE poll forecasts job growth of just under 2 percent next year, which will put the unemployment rate at 5.8 percent.r

Forecasters say strong productivity growth — the ability to produce more with fewer workers — will delay the need for employers to hire back laid-off workers. Without growth in employment, consumer spending eventually will decline.r

The latest figures seem to give a boost to the re-election prospects of President Bush. The experts agree Bush’s third round of tax cuts and the Fed’s low interest rates were the enticing factors that led consumers and businesses to spend and invest more.r

Democrats can still point to the loss of jobs and a record deficit. Political persuasions aside, we hope for sustained growth.