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No April Fool's Joke: Economic Recovery Remains Elusive

By John S. McClenahen As the second-calendar quarter of 2003 begins, the prospect of a self-sustaining U.S. economic recovery from the 2001 recession looks even less certain than it did three months ago. "Our tracking shows that roughly 80% of the [economic] data releases that have taken place during the last month have come in below consensus expectations, which weren't very cheery to begin with," notes David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York. "That reinforces our view that there is more to the economy's weakness than war-jitters alone," says Rosenberg. Among the signs of weakness that Rosenberg sees are declining new-home sales and real household earnings. He also expects forthcoming GDP data to show that lower inventories subtracted from growth in the first quarter of this year. "In the consumer sector, more minus signs are likely to start appearing in the data unless the war ends quickly and energy prices turn down sharply," predicts Rosenberg. "To stimulate the economy -- not to merely remove restraint -- oil prices have to average less than $26 a barrel this year." In recent days, oil has been running about $30 per barrel.

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