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Upbeat (economic) Signs Hold Cautions for the Future

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papau Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-05 01:52 PM
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Upbeat (economic) Signs Hold Cautions for the Future
When we get on Friday something close to economists expected 220,000 new jobs created last month, what will the Dems say to remind folks of the anemic job growth over 5 years of Bush?

Will someone ask why we expect business to pick up any of the slack if consumers are no longer spending as much as they once did? Could new home sales be at a record pace because buyers see a final opportunity to purchase a new house before interest rates go up again, so sales of existing homes slowing, construction activity easing, mortgage applications falling and confidence declining among home builders are the more important signs?

November 30, 2005
Economic Memo
Upbeat Signs Hold Cautions for the Future

<snip>For every encouraging sign, there is an explanation. Consumer confidence is bouncing back from what were arguably some of its worst readings in years. Gasoline prices - the national average is now $2.15, according to the Energy Information Administration - have fallen because higher prices held down demand and Gulf Coast supplies have been slowly restored.

The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.

<snip>"I basically have a wait-and-see attitude (for the record pace of new-home sales) with some healthy suspicion about this report," said David F. Seiders, chief economist at the National Association of Home Builders. "Either there is something that all of those other reports are not telling us, or this will get revised."

In another seemingly upbeat report, the Conference Board, a research group supported by business, said consumer confidence jumped 16 percent. Still, it is below the pre-Katrina level. And the Commerce Department said orders for durable goods - big-ticket items that last more than three years - jumped 3.4 percent, but most of that increase was concentrated in military and commercial planes.

<snip>"That (hurricane-affected regions) is going to push up (housing-led) production activity into the first half of the year," said Michael C. Fratantoni, an economist at the Mortgage Bankers Association, which expects 3.7 percent economic growth in 2006, up from 3.6 percent in 2005. "The second half of the year, we see somewhat of a drop-off."

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