http://dailynews.yahoo.com/h/nm/20010522/bs/economy_oneill_growth_dc_2.html

O'Neill: Slowdown Over, Economy Stable

NEW YORK (Reuters) - U.S. Treasury Secretary Paul O'Neill said on Tuesday the rapid unraveling of the U.S. economy has ended and conditions now are in place for a gradual recovery over the coming year.

But O'Neill in an interview with Bloomberg Television said he doubted the U.S. economy would bounce back quickly to the fast-paced growth rates enjoyed in recent years.

``I don't want to say in the next 12 months we are going to have a 4 percent growth rate because I don't think that is realistic,'' he said. ``We have got to climb out of this relatively low rate to a better rate and that is going to take some time.''

The economy slammed into the wall in November and December last year and declined sharply, but since then it has stabilized and businesses are making progress in working down excess inventories, he said.

``The slowing was over by the first of February, and now we are just kind of bouncing along something between half a percent real growth to 2 percent real growth,'' O'Neill said.

Those figures are in line with most economists' forecasts. The government on Friday revises its first-quarter growth data, currently at 2 percent, and economists on average look for a revised 1.5 percent rate for the January-March period, with growth recovering gradually later this year.

He called the Federal Reserve (news - web sites)'s aggressive interest rate cuts -- 2.5 percentage points since early January -- ``very constructive'' and said this monetary easing, combined with the Bush administration's tax cut plan, have created the conditions for a return to high rates of growth in the near future.

While rapid growth may not be just around the corner, O'Neill said he is confident that the U.S. economy can return to a 3.5 percent to 4 percent annual rate without generating inflationary pressures. He declined to say what additional Fed action might be needed to ensure a recovery.

The Bush administration's $1.35 trillion tax cut bill, now being voted on by the U.S. Senate, would provide some ballast to the economy. But O'Neill stopped short of saying it was the needed medicine to revitalize growth, which has slowed from average annual rates of about 4 percent.

``This is going to be good for the economy in every conceivable way,'' O'Neill said. ``It will put money back where it belongs and back where it came from.''

O'Neill said he expects Americans would use the tax cut in a variety of ways, from increasing their savings to buying new cars to financing college educations.

The Senate today is expected to complete work on its version of the tax bill, which then would have to go back to committee to iron out differences with the House version before it could be sent to the White House for enactment into law.

O'Neill said he expects the tax bill to be ready for President Bush (news - web sites)'s signature by Friday.

In the interview, O'Neill also reiterated his commitment to a strong dollar policy, calling it a successful strategy.

However, he at first appeared ambiguous when asked how he would respond to U.S. manufacturers who say that the strong dollar is hurting exports.

``I would like to see some evidence of successful engagements to try to change the course of events, and I would be interested in the evidence,'' O'Neill said.

Asked whether that meant he favored weakening the currency, O'Neill said: ``We are for a strong dollar, and we are going to continue to be for a strong dollar; and contrary to what you have just asserted, it has served us very well, and I don't think there is anything more to say.''

O'Neill has stumbled in the past in clearly expressing his views on foreign exchange, suggesting that he may be veering away from the strong dollar policy consistently expounded by his immediate predecessors Treasury Secretary Robert Rubin and Larry Summers.

His comments had no effect on currency or bond markets.

-- Anonymous, May 22, 2001

Answers

Hey Reuben, How bout that Bush Energy Agenda!

Tons of great new Big Government thingees for ya. More control, more taxes, all the stuff which makes a Republican(Liberal) drool. I will assume from your silence you approve of his latest Big Government Agenda.

Oh well, just add it to the growing pile of More Governmental Control courtesy of the Liberal Republican Party.

-- Anonymous, May 22, 2001

The best government is the one who governs less, or brainwashes the most to think it does

-- Anonymous, May 22, 2001

Yup, as Red Barber would say (as he did for over 50 years on radio and TV) HOW ABOUT THAT BUSH ENERGY POLICY?

Too bad you are incapable of even understanding it or researching any alternatives to his proposals. In fact, if you can even tell where it might differ from the boring person he defeated last November, I would be shocked. And don't bother trying to include "windmills". Your only knowledge about such things would be tilting against them.

-- Anonymous, May 25, 2001

Energy solution is simple. Enforce the laws on the books.

But I believe in the marketplace, you?

-- Anonymous, May 25, 2001

Recession May Have Begun -- Research Firm

http://www.greenspun.com/bboard/q-and-a-fetch- msg.tcl?msg_id=005JZT

-- Anonymous, May 26, 2001

Do I need my ruler and level again Charlie?

LOL

-- Anonymous, May 26, 2001

A ruler and level would be much safer than letting your near paper and scissors.

Ask your Mommie for permission and help.

And try to remember, just because you chant the same BS over and over doesn't mean you influence one single person.

Notice that even Alan G.'s comments were most specific about being unhappy with the RATE OF GROWTH not the overall GDP. So if the economy is GROWING (though slower than Mr. Big would like) WHAT IS THE BIG DEAL?

WHERE IS THIS "recession" that people mumble about? The Malls are jammed, the new home sales continue but at less a pace than the strong pace inspired by the bonuses from the dotMesses in early 2000. Same with Car sales and all Consumer Electronics. FEW people are "cutting back".

I will go on record again as saying we are OUT of any downward mode and stable on the cusp of moving ahead AGAIN. Even the price of gas at its highest this weekend won't stop traffic to the Lakes and shores.

We squeezed out almost all the Idiotic Dot Coms and some of the weaker players in the so called "new economy". Big Enterprise is beginning to expand.

I can remember in the 1960s when XRX and PRD both sold at 100 times earnings based on prior growth. Even IBM only got 35 times earnings. Then one day someone questioned the high growth of XRX, PRD and of all things: Brunswick and AMF. It was suggested that to maintain the compounded growth for Bowling of the 1950s, everyone in America would have to bowl five times a week and then ten times. That was ludicrous. Same with growth of photo copies and Instant Pictures. All four stocks crashed.

But all four as still in business. Strange but true. Some of the Dot Coms will NEVER come back and that includes some that went to 75 or 100/share to fall under $1.00 now.

As for 'Telecommn' try this. Many of the cut backs were because the Telecomm industry is ONLY GOING TO GROW AT 100% in revs. this year not the 300-500% that some "Wall St. Analysts" were projecting back in 1999. Everyone over hired in anticipation and now some of the lesser abled must be sent back to the Head Hunters.

There is still demand for QUALIFIED PEOPLE but little for BS "Consultants". Some of the people at places like "MARCH FIRST" will never work in high tech again but they will be HAPPIER AT THE USED CAR LOTS THEY CAME FROM.

-- Anonymous, May 26, 2001

Just one note to add. I for one am most unhappy about the way that CISCO seems to have done business and reported its sales and earnings in the last few years. There is evidence that they not only sold product to unqualified buyers,,,,,they leant the same buyers the money to pay for the sales. Then they wrote it all off as "bad debt" in the last report.

The industry has known of CISCO's business practices for some times. This does not mean they are a bad company for they are not. However, WHERE WERE THE STOCK BROKERS"S and the "Due Dilligence" they are supposed to perform?

There is also a similar report from the NY Times on questions about Computer Associates reporting practices. Again, where is the due dilligence?

Given that and one more case I know of that is pure "Hot Air" accounting, it is still time to be very careful what you might invest in and time to always be ready to dump out "Losers" before the Herd.

-- Anonymous, May 26, 2001

I will go on record again as saying we are OUT of any downward mode and stable on the cusp of moving ahead AGAIN.

-- Anonymous, May 26, 2001

CISCO shocks ya Reuben? Course they shock you. You don't fully understand the Fleecing of the American People. If you did, this news is old news.

The VALUE present in the "system", comes from the backs of the working saps of this country. Easiest way to extort such is by using the Tax Code.

CISCO does what all "capitalists" do, transfer the "risk" to Joe Blow. Most times Joe Blow even has to foot the bill for these schemes, before and after these practices predictably implode.

Fox is in the Hen House, and farmer Brown has died.

-- Anonymous, May 26, 2001

Perceptive Eyeroller, but lets not forget who our real president is....Sun Myung Moon. Bush might carry the title, but the Moonies have the real power in this country.

-- Anonymous, May 28, 2001

Moonies are but one part of the puzzle.

-- Anonymous, May 28, 2001

Charlie, what say you about Greenspan's statements this week that we're not out of the woods yet?

To tell you the truth, I'd place more faith in what Greenspan says than in what some former CEO says.

Call me skeptical, but I think O'Neill has a partisan agenda, not to mention being completely unqualified for his current position. Ah, the beauty of large campaign contributions.

Of course, I don't really expect you to address the issues. I'm not THAT much of an optimist.

-- Anonymous, May 29, 2001

Tuesday May 29 1:09 PM ET Signs of Consumer Health Brighten Outlook By Daniel Sternoff

NEW YORK (Reuters) - While rattled over rising job losses, U.S. consumers have the confidence and spending power to keep the economy growing modestly even as firms curtail investment and production, two reports suggested on Tuesday.

Analysts said five deep Federal Reserve (news - web sites) interest rate cuts this year, the stock market's two-month rebound after a year of steep declines and the promise of tax relief from Congress had all boosted consumers' optimism and their propensity to spend.

The Conference Board (news - web sites)'s barometer of consumer confidence jumped to 115.5 in May, up from an upwardly revised 109.9 in April, and the survey of 5,000 households indicated plans to increase spending in coming months.

The index was stronger than a 111.2 reading forecast by economists polled by Reuters and seemed to indicate that consumer confidence has leveled off after tumbling to a 4-1/2 year low of 109.2 in February.

In a separate report, the government said Americans increased spending more quickly than their incomes grew in April, suggesting that economic weakness has not severely dented consumer buying behavior.

The Commerce Department (news - web sites) reported personal income grew at a seasonally adjusted 0.3 percent annual rate in April, down from March's 0.5 percent pace. But spending on goods and services grew at a faster 0.4 percent pace, up from March's 0.2 percent rate.

``While consumers are rating current employment conditions as difficult, they do not see us headed for a recession or a significant increase in the unemployment rate,'' said Lynn Franco, director of the Conference Board's Consumer Research Center.

Fed Chairman Alan Greenspan (news - web sites) last week identified the risk of a retrenchment in consumer spending, which drives two- thirds of economic growth, as a potential source of future weakness.

The strength in the confidence report, which mirrored the findings of a second survey of consumer confidence released by the University of Michigan on Friday, was primarily driven by expectations that faltering economic growth will perk up.

The Conference Board said 16.8 percent of Americans expected business conditions will improve in the next six months, up from 14.1 percent in April, while those expecting conditions to deteriorate fell to 13.5 percent from 14.5 percent.

The Present Situation Index, a gauge of consumer views of the economy right now, rose to 158.6 from 156.0 in April. The Expectations Index, which measures the outlook for the next six months, bounced to 86.8 in May from 79.1 in April.

The report found that consumers claiming jobs were now ``hard to get'' increased in May to 14.7 percent from 14.2 percent, and those reporting jobs were ``plentiful'' declined to 39.5 percent from 40.1 percent.

But 13.8 percent of those surveyed expected job growth to increase in coming months, up from 12.3 percent in the prior survey, and those expecting fewer jobs to become available fell to 19.9 percent from 22.9 percent in April.

Longer-dated Treasuries were lifted by Tuesday's data as investors shifted cash from interest-rate sensitive short-dated government securities, seeing the uptick in sentiment as a sign that the Fed may not have to move aggressively to cut rates.

-- Anonymous, May 29, 2001

U.S. consumers have the confidence and spending power to keep the economy growing modestly even as firms curtail investment and production...

U.S. consumers are somewhat confident at the moment because the Dow is back up over 11,000. And the stock market is back up because investors are betting that the Fed's interest rate cuts will turn things around.

But what are investors betting on? That the Fed can avert a sharp recession? It's quite possible that the Fed could avoid out-right recession. But if investors are expecting company profits to be on the rise by, say, the fourth quarter, and profits are still depressed at that point, then the Dow might fall back under 10,000 again, taking with it consumer confidence and spending.

I think the reason this recession seems so mild is because it's only just started -- in March. The reason I say March is because even though industrial production had been slipping, the number of service jobs continued to increase through February. In March and then again in April, though, the number of jobs in the service sector shrank.

Not a good sign.

-- Anonymous, May 30, 2001

Your 3 cents has deflated below 2. Recession set in last fall depending on the sector.

Your penchant for 'doomerism' is evident. Keep looking. You may find some more "nuggets" that "prove" your doomer views.

Luckily, for people like you, facts and data don't matter. Just collecting a few cow chips suffices as proof.

-- Anonymous, May 31, 2001