Economic Data Continue To Disappoint

By John S. McClenahen There's good reason for economists to be lowering their U.S. GDP growth forecasts for the this calendar quarter and full-year 2003. Basic data continue to disappoint. Manufacturing production declined 0.1% in February, although the overall industrial sector, which includes mines and utilities as well as manufacturing, posted a 0.1% gain for the month, reports the Federal Reserve. "Large month-to-month swings in a few industries, particularly motor vehicles, mask the very difficult problems in manufacturing, such as rising imports from low-wage developing countries and huge excess capacity in many domestic industries," emphasizes Daniel J. Meckstroth, chief economist for Manufacturers Alliance MAPI, an Arlington, Va.-based business policy group. "The industrial sector needs stronger domestic growth and more export opportunities in order to accommodate this type of structural change." Paced by higher energy prices, the Producer Price Index for finished goods (PPI) rose 1% last month, says the U.S. Labor Department. Indeed, without the 7.4% rise in energy prices, the closely watched PPI, a major measure of inflation, would have fallen 0.3% in February. In January, manufacturers' inventories, not including semiconductors, rose 0.2% to $1.147 trillion, reports the U.S. Commerce Department. Finally, the current account, the broadest measure of U.S. international economic activity, posted a record $503.4 billion deficit last year, the Commerce Department reports. The deficit on trade in goods and services alone was $435.5 billion, $77.2 billion more than in 2001.

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