Economy forcing itself back into news

Much to the GOP's chagrin, the economy is muscling its way into the news. The catalyst isn't the Dems coordinated campaign to shine the spotlight on the economy, but, once again, a collapsing stock market.

As of this writing, the Dow is down another 142 points, and is hovering just above the 7700 mark. These last few September weeks are particularly important, as the next batch of 401(k) statements will be mailed out at month's end.

In short, the markets are responding to weak corporate news and the fourth consecutive monthly decline in consumer confidence. Currently, the economy is almost exclusively propped up by consumer spending, and any hint of a slowdown sends shivers through the markets.

The September consumer confidence report showed that people are pulling back a little on their plans to buy big-ticket items, such as new cars, washing machines and vacations.

Only 25.8 percent of consumers planned to buy a major appliance in the next six months, down sharply from 31.3 percent in August, now at its lowest level since October 1997.

The percentage of consumers planning to buy an automobile fell to the lowest level since June 2001, to 6.8 percent from 7.4 percent. Those planning to buy a new home tumbled to the lowest since last November, at 3.3 percent from 4.5 percent.

"These results continue to fan concerns that resilient consumers will finally began to pull back," said Jade Zelnik, chief economist at Greenwich Capital Markets.

Given the economy is almost certainly in double-dip "Dubya" recession, not even Iraq will be able to keep these horror stories at bay. Another example today:

Reversing some of the social gains of the late 1990s, poverty rates and income inequality both rose last year while the typical household's income went down, the government reported today, largely reflecting the effects of the economic recession.

In its annual report on income and poverty, the Census Bureau said that 1.3 million Americans slipped below the government's official poverty line last year, the first increase since 1993. As a result, 11.7 percent of the population is in poverty, up from 11.3 percent in 2000.

And then there's this kicker that surely elicited a few congratulatory pats in the back at the White House:

In terms of class breakdown, only households with incomes above $150,000 were able to post gains, with the greatest losses in percentage terms occurring at the bottom of the income ladder, the report showed.

Posted September 24, 2002 10:26 AM | Comments (1)