by manxkat » Wed Nov 23, 2005 2:34 pm
I came across this article in the MSM the other day -- I don't usually look at financial outlook reports, but this one grabbed my eye simply because it flies in the face of everything I've been reading outside the MSM, which talks about everything from stagnant growth/inflation to total collapse of the economy (post Katrina/Rita). <br><br>There's a paragraph that says: "For instance, gasoline supplies lost by the storms were replaced by imports. This process was true for many industries, he said." But, there's no explanation that these imports from Europe's oil reserve have stopped and the U.S. still hasn't regained it's pre-Katrina oil production levels, not by a long shot. <br><br>Are the rosey scenarios as described in this article being touted simply to draw more investors and average people back into the stock market? Is this a conspiracy on Wall Street, or are we just seeing a bunch of pie-in-the-sky economists who are afraid of reality? There's only one economist cited below (Lewis Alexander) who's showing some caution but he still sees growth, just not as much as the other economists.<br><br><!--EZCODE BOLD START--><strong><!--EZCODE LINK START--><a href="http://tinyurl.com/9khz5" target="top">Economy absorbs hurricanes' punch</a><!--EZCODE LINK END--></strong><!--EZCODE BOLD END--><br><br>By Greg Robb, MarketWatch<br>Nov. 18, 2005 <br><br>WASHINGTON (MarketWatch) - As the three-month anniversary of the landing of Hurricane Katrina approaches, it is becoming clear that the U.S. economy was not hurt in a major way by the storms, economists said Friday.<br><br>Although tragic for the residents of the Gulf Coast region, the hurricanes happened to strike just when the economy was growing at its strongest pace in the past two years.<br><br>Economists believe third quarter growth will be revised up to as high as 4.2% from the initial estimate of a 3.8% rate.<br><br>"Without the hurricanes, we might have been somewhere between 4.5% and 5% growth," said Nigel Gault, chief U.S. economist at Global Insight, a forecasting firm in Lexington, Mass.<br><br>The government will release its revised third quarter GDP estimate on Nov. 30.<br><br>Not only will growth be stronger-than-expected in the third quarter, but the outlook for the fourth quarter is improving.<br><br>Economists now estimate that the economy will grow over a 3.0% rate in the fourth quarter, even though consumer spending will likely be weaker.<br><br>Growth should get a boost from production as businesses seek to add to low inventories, economists said.<br><br>"The macro-economy in the U.S. is just so large relative to the areas of stress, that in the macroeconomic context you tend not to see these natural disasters," said Neil Soss, chief economist at Credit Suisse First Boston.<br><br>Ed Yardeni, chief investment strategist at Oak Associates, said globalization is one of the factors behind the economy's surprising performance. <br><br>For instance, gasoline supplies lost by the storms were replaced by imports. This process was true for many industries, he said.<br><br>Looking ahead, many economists see blue skies.<br><br>Neil Soss of CSFB sees growth averaging around a 3.5% rate over the next six quarters.<br><br>"You'll get the normal rhythm of slightly faster and slightly slower...but we don't see any risk of a recession or a growth-recession, where growth falls below potential, over the next year and a half horizon," Soss said.<br><br>Not everyone sees so rosy a scenario developing.<br><br>Lewis Alexander, chief economist at Citigroup, sees growth in 2006 will probably be slower than this year.<br><br>"It is hard to build a case for a big surge of investment" to replace a slowdown in consumer spending, Alexander said.<br><br>Gault of Global Insight sees growth averaging 3.7% in the first half of next year and then slowing down steadily.<br><br>A key to the outlook is the housing sector. As the housing sector cools off, GDP growth will also tail off, Gault said.<br><br><!--EZCODE BOLD START--><strong>Next week's data</strong><!--EZCODE BOLD END--><br><br>There are only a few indicators in the holiday shortened week.<br><br>The index of leading economic indicators is expected to rebound by 0.5 % in October after falling 0.7% in September. The Conference Board will release its index at 10 a.m. on Monday. <br><br>Initial jobless claims are expected to move up 7,000 to 310,000 in the week ending Nov. 19 after falling 25,000 to a seven-month low of 303,000 in the previous week. Because of the holiday, the Labor Department will release the jobless claims report on Wednesday at 8:30 a.m. <br><br>Consumer sentiment is expected to have strengthened very slightly in late November to 80.2 from 79.9 earlier in the month. Media reports of the report from the University of Michigan generally should be posted by 9:50 a.m on Wednesday.<br><br> <p></p><i></i>
