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Friday, Sep. 25, 1998
U.S. job market slows, but is still healthy
American economy grew 1.8 percent despite worldwide market woes
By DAVE SKIDMORE
Associated PressWASHINGTON - The American job market is holding up fairly well despite weakness sloshing across the borders from overseas, but economists warn that may not remain true much longer.
In a fresh estimate, the Commerce Department said Thursday the economy grew at a lackluster 1.8 percent annual rate during the April-June quarter.
Global economic turmoil and other factors reduced it to less than half the vibrant 5.5 percent rate of the year's first three months, and analysts don't expect much better growth before next year.
Despite that, three separate reports showed the U.S. expansion - at 7 years the second longest in history - has life left yet.
First-time claims for unemployment benefits fell by 8,000 to a seasonally adjusted 292,000 last week, the lowest level in five months, the Labor Department said.
The Conference Board, a private business research group in New York, said major newspapers enjoyed strong sales of help-wanted advertisements in August. Its monthly advertising index rose to 92, up one point from July.
And orders for big-ticket factory goods jumped 1.6 percent in August, the third consecutive gain to follow a 3.3 percent plunge in May, the Commerce Department said.
All three reports support the view the U.S. economy will weather the economic storms that so far have triggered slumps in Asia and Russia and threatened Latin America.
``Growth will continue, only at a slower pace,'' said economist Jerry Jasinowski, president of the National Association of Manufacturers.
But he and other analysts noted that both the unemployment claims and factory orders reports were weaker than they first appeared. Without a surge in aircraft orders and a rebound in auto manufacturing reflecting the end of the General Motors strikes, orders for durable goods, items expected to last three or more years, would have fallen 2.1 percent in August.
And continuing - as opposed to new - unemployment claims rose by 2,000 but remained basically unchanged at 2.2 million. That's a sign it's taking a long time for the unemployed to find work, and many economists believe overseas turmoil will further erode labor market strength.
Economist Mark Zandi of Regional Financial Associates in West Chester, Pa., said businesses are filling positions that have been open for some months rather than creating new positions.
He said by early next year the impact of the world slump will be felt more broadly in the U.S. economy than just in agriculture, energy and manufacturing. Chances of a recession next year have risen to about one in three, he said.
Thursday's estimate of second-quarter growth in the gross domestic product, the value of all goods and services produced within U.S. borders, was a bit better than the 1.6 percent rate estimated a month ago.
Businesses sharply slowed production of goods for inventory, and that alone subtracted 2.7 percentage points from the growth rate. Also, the global slowdown showed up in a drop in export sales, at a 7.7 percent annual rate, and an increase in imports at a 9.3 percent rate.
After-tax corporate profits managed a weak rebound in the second quarter, rising 0.6 percent following back-to-back drops during the two previous quarters.
Consumer spending, however, grew at a brisk 6.1 percent annual rate and housing construction at a 15 percent rate. Businesses increased investment in new equipment, including computers, at an 18.8 percent rate.
All three categories have been fueled by low interest rates, which have been for Americans the silver lining of the world's financial problems. Freddie Mac, the mortgage company, said interest on fixed-rate, 30-year mortgages averaged 6.64 percent this week, down from 6.66 percent last week and the lowest since the company began tracking loans in 1971.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web