Road to recovery
Friday, November 7, 2003
The news about the nation's economic growth during the third quarter of 2003 was heartening, to say the least. The Commerce Department said the gross domestic product grew at a 7.2 percent annual pace from July through September, the fastest rate of growth in more than two decades.
While this rate of growth is not expected to continue, there are plenty of indications that the economy if finally finding its legs after a recession. The rebound has been slow, but this may mean the current economic growth has a firmer footing than a quick turnaround.
Critics point out that the jobless rate, currently 6.1 percent nationwide, is still too high, and they are right. But don't let efforts to deflate the good economic news overshadow the fact that 57,000 jobs were added in September alone, and unemployment-benefit claims dropped slightly the week before the Commerce Department announced its third-quarter economic news. In addition, wages and benefits rose a solid 1 percent during the third quarter, compared with 0.9 percent in the second quarter of this year.
Analysts say there are many reasons for the slow recovery from the recession that plagued the economy for much of the first two years of George W. Bush's presidency. And there are just as many reasons for why the economy seems to be revving its engines.
Consumers, whose spending helps drive the economy, have been overly cautious in the wake of the recession. For many of them, the economic downturn was a new experience after a full decade of the most significant growth in U.S. history. And many of those consumers had become investors in the stock markets during those good years, benefiting from the boom across every sector. So when the economy faltered and market indexes plunged, many neophyte investor-consumers panicked a bit and were reluctant to take many risks with their disposable income.
Contributing to the unsettled economy were the acts of terrorism that clobbered the country two years ago. And U.S. military involvement in Afghanistan and Iraq have further diverted America's attention.
But the third-quarter statistics show consumer confidence is being restored. One economist said Americans were "coming out of their cocoon." And they are growing more confident that the nation is on the right course and in good hands.
Another factor influencing the economic turnaround is President Bush's tax cuts, which have helped many Americans get over their financial jitters.
And surely the lowest U.S. interest rates in 40 years have played a big part in the economic trends reported for the third quarter. Individual consumers and businesses alike have taken advantage of low-cost financing to spend more.
The challenge now is to sustain the growth pattern that has developed this year. The Federal Reserve remains committed to low interest rates. Corruption and fraud in key segments of the nation's financial world are being exposed and prosecuted. Consumers feel better about using their checkbooks and credit cards. Employers are boosting production and adding jobs.
Right now, the prospects for continued economic recovery and a strong 2004 are good. This is excellent news for a nation that has just endured a string of hard blows.