The Wall Street Journal Online posted its October economic forecasting survey this morning and the results are more good news for the recovery! The economists surveyed raised their estimate for third-quarter growth to 5%, up from the 4.7% rate they predicted in a September survey and from 3.6% in August.
The economists surveyed attributed the recent strengthening of the economy to President Bush’s pro-growth policies.
Many economists attributed the strength in consumer spending to the latest federal-tax reductions. Some economists said they were caught off-guard by the extent of the stimulus created by the cuts, which included rebate checks for some families of as much as $400 per child.
Consumer spending rose a strong 0.8% in August from July, after a 0.9% advance the previous month. September data aren’t yet available, but if the rate continued — and economists have their doubts, given a slowdown in auto sales last month — that could mean quarterly spending growth not seen in more than 15 years.
Says Talon News:
New applications for unemployment benefits fell to 382,000 for the week of October 4. This was the lowest level they have been at since the week of February 8. Financial experts had predicted that the number of jobless claims would only fall to 395,000.
“The [drop in unemployment] number confirms that there could be a turn in employment, backing up last Friday’s monthly unemployment report,” Infinity Brokerage Services analyst John Person told the Associated Press. “The stock market is receiving a barrage of good news from the employment front, from the earnings front, and it’s obviously looking very strong.”
Indeed, the stock market reacted to the positive employment news about unemployment and retail sales on Thursday.
All three of the major stock indexes benefited from busy trading at their highest levels in over a year. The Dow Jones Industrial Average rose by 85 points to 9716, while the Nasdaq Composite Index grew by 31.50 to end the day at 1925.30. The S&P 500 increased 8.30 to finish up at 1042.10.
Analysts say the decrease in unemployment is a direct result of the job market picking up as the U.S. economy enters what is expected to be a robust fourth quarter, when companies generally make most of their yearly profits.
The best evidence that the economy has been revived can be found in the unexpectedly strong September sales data for mega-retailers such as Wal-Mart and Target. Retail sales comprise two-thirds of the American economy.
Same-store sales for Wal-Mart jumped 6 percent in September, higher than the 4.9 percent rise that was projected. Overall, Wal-Mart’s sales went up by 13 percent.
As for Target, same-stores sales grew by 5.4 percent, higher than the 4.1 percent rise that was predicted. However, Target’s total sales were down slightly by 0.8 percent.
A payrolls report for the month of September released today reveals that more jobs were added to the economy in September than taken away. This was the first time this has occurred since February. This additional good economic news has given investors and businesses solace for the upcoming holiday season.
The unemployment rate in the U.S. currently stands at 6.1 percent, with over 3.6 million out-of-work Americans still collecting weekly checks.
This latest news does not bode well for the Democrat Party, which has been hoping to capitalize on unemployment and the economy as major issues against President George W. Bush in the 2004 presidential election.