Good And Bad Economic News
Here’s your "good news, bad news" on the economy today. First, as for the past, the Bush Administration reported that Third Quarter 2004 GDP growth was actually a solid 3.9%, up from the initial 3.7% estimate. So heading into the election, Bush was assisted by an economy that had a good deal of wind in its sails.
Now the bad news, and for the future: the widely regarded Conference Board gauge of consumer confidence fell for the four straight month to an eight month low. The reason for the softening consumer confidence?
The main cause appeared to be jobs remained scarce despite strong economic growth, as the percentage of people reporting jobs "hard to get" climbed to 28.1 percent from 27.9 percent in October -- possibly foreshadowing spending caution ahead.
That spending caution this holiday season may already be upon us.
Costlier oil, which sucks dollars from shoppers' pockets to pay fuel bills, also was cited as a factor in a sluggish start to post-Thanksgiving holiday sales. Early figures from Johnson Redbook's Retail Sales Index showed November sales up 2.9 percent from a year earlier, missing a target of 3.5 percent.
Sales were 0.5 percent below October. Retailers depend heavily on the vital shopping season from Thanksgiving through Christmas for as much as 70 percent of their annual sales.
And our friends overseas think that 2005 won’t be as good as 2004:
Lofty oil prices cast a shadow over longer-term prospects, though, as the Paris-based Organization for Economic Cooperation and Development predicted U.S. economic growth will reach 4.4 percent this year but slow to 3.3 percent in 2005.
"The expansion has lost some momentum, in part as a consequence of energy price increases," the OECD said.
Folks, if we slow to 3% GDP growth in 2005 before any significant good-paying job growth finally materializes, then the long term job growth outlook looks dicey for Mr. Bush’s second term, especially at a time of rising interest rates, still-high oil prices, and a softening housing and durable goods market.