U.S. Economy Continues To Struggle

By John S. McClenahen Will they or won't they? Next Tuesday, Chairman Alan Greenspan and his Federal Open Market Committee could lower U.S. short-term rates by shaving another 25 basis points off the federal funds rate, now at 1.25%. But that remains to be seen. In the meantime, the case for a cut is growing stronger. Retail sales plunged 1.6% in February to $304.1 billion, reports the U.S. Commerce Department. That's a much larger percentage decline from January than the 0.5% that economists generally expected. And although the number of initial claims for jobless benefits fell to 420,000 last week, some 15,000 fewer than the week before, Labor Department data show the total remains well above the 400,000 mark, suggesting an absence of widespread job creation. Indeed, the four-week moving average for initial claims, which some economists believe better reflects underlying trends, increased to 419,750 last week, up nearly 10,000 from the previous week's mark.

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