Text 4139, 117 rader
Skriven 2004-10-27 17:18:00 av Jeff Binkley (1:226/600)
Ärende: Economy
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More bad news for the Democrats...

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http://biz.yahoo.com/ap/041027/economy_9.html

Associated Press
Fed Reports Economic Growth Is Continuing
Wednesday October 27, 3:44 pm ET
By Martin Crutsinger, AP Economics Writer
Fed Reports U.S. Economic Growth Is Continuing in Spite of Rising Energy Costs


WASHINGTON (AP) -- The U.S. economy continued to grow in September and early
October despite being buffeted by rising energy costs and increased uncertainty
caused by the presidential campaign, the Federal Reserve said Wednesday, in its
last snapshot of business conditions before Election Day.

The survey of business activity around the country, compiled from reports
submitted by the Fed's 12 regional banks, depicted an economy that was moving
ahead with even the hard-hit manufacturing sector beginning to regain its
footing after a prolonged period of weakness.

"Economic activity continued to expand in September and early October," the Fed
said in the new survey, which found that the pace of activity had quickened in
the Richmond and Dallas districts. Five other districts -- Boston,
Philadelphia, Chicago, Minneapolis and Kansas City -- were reporting steady
expansions were under way.

The Fed's report will be used by central bank policy-makers when they next meet
on Nov. 10 to decide whether to raise interest rates further.

Many economists believe that the central bank will push up rates for a fourth
time this year in an effort to make sure that a rebounding economy does not
generate unwanted inflationary pressures.

But some analysts believe the Fed could decide to pause in its credit
tightening out of concerns that rising energy prices, which climbed to record
highs above $50 per barrel for crude oil, could threaten to derail the economic
recovery.

While noting that higher energy costs did seem to be constraining consumer and
business demand in some areas, the Fed survey did not signal any worries that
this year's price spike could bring on a recession, as did the oil shocks of
the 1970s and early 1980s. The Fed noted that some districts were reporting
increased uncertainty stemming from the presidential campaign.

In other economic news, the Commerce Department reported Wednesday that orders
for big-ticket manufacturing goods edged up a modest 0.2 percent in September
while sales of new homes were up a bigger-than-expected 3.5 percent to the
third highest monthly level on record.

The economy's performance has become a top issue in the presidential campaign
with President Bush contending that his tax cuts have laid the stage for
stronger growth in the years ahead while Democratic challenger John Kerry
argues that Bush's tax cuts represented a windfall for the wealthy while doing
little to boost the overall economy.

The better-than-expected 3.5 percent rise in new home sales pushed activity to
an annual rate of 1.21 million in September, the third highest level on record
behind only March and May of this year.

The 0.2 percent rise in durable goods orders in September was only the third
increase of the past six months. Orders were up 1.9 percent in July and 1.3
percent in June after having posted a 0.6 percent drop in August and even
bigger declines in May and April.

The Fed report, however, found some hopeful signs that manufacturing, which has
shed 2.7 million jobs since Bush took office, was beginning to turn the corner
with a number of districts reporting rising production.

Both the Atlanta and Dallas districts did report some production disruptions
from the hurricanes that hit Florida and other coastal states in September.

The Fed said that wage pressures for the most part remained contained although
occupations where workers were in short supply such as truck drivers and
skilled trades people were reporting scattered wage pressures.

The Fed said that fall harvests were above normal in much of the country with
corn and soybean producers expected to set records in some districts.

The $417 million September increase in orders for durable goods, items expected
to last three or more years, pushed the total for the month to $195.7 billion
on a seasonally adjusted basis.

Excluding the volatile transportation sector, orders were up a stronger 1.7
percent last month following a 2.8 percent increase in August.

The rebound last month was led by a 9.3 percent increase in demand for
computers and other electronic products, reflecting a 35.6 percent jump in
orders for communications equipment.

The strength in new home sales reflected strength in all regions of the country
except the West, where sales dropped 0.8 percent in September to an annual rate
of 358,000 homes. Sales were up 12.3 percent in the Midwest to an annual rate
of 238,000 units and posted a 6 percent increase in the Northeast to an annual
rate of 71,000 units.

Sales in the South, where activity was held back by a string of hurricanes,
rose by 2.7 percent to an annual rate of 539,000 units.

The median price for a new home -- the midpoint where half the homes sold for
more and half for less -- dropped to $197,700 in September, down 8.4 percent
from the August median price of $215,900.

On Monday, the government reported that sales of existing homes rose 3.1
percent in September, also hitting the third highest level on record at a
seasonally adjusted annual rate of 6.75 million units.

Home sales have been powered by continued low mortgage rates. The average
monthly rate on a 30-year mortgage in September was 5.75 percent, down from
5.87 percent in August and 6.15 percent in September a year ago. Last week
rates on 30-year mortgages averaged 5.69 percent, the lowest level seen in six
months.

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