The U.S. Economy Stumbles Again . . .
The economy has been struggling through the early stages of recovery so far this year as a series of shocks prevented smooth acceleration out of the 2001 recession. The recovery looked quite promising early in the year, but then the shock waves from “Enron-itis” and related scandals took a heavy toll on the stock market as well as business and consumer confidence. Economic growth weakened a good bit during the second quarter. The third quarter brought better news as consumer spending picked up and business spending on capital equipment and inventories staged a revival of sorts, driving the overall economy toward a more respectable growth rate. (We’re estimating about 4%.)
But more trouble was brewing even before the third quarter ended, and it’s now clear that the U.S. economy has stumbled again – reviving fears of a bona fide double-dip recession. The withdrawal of sales incentives by U.S. automakers is one of the recent downers. Downward pressures also have been applied by weaker demands from abroad, the West Coast dock strike, and concerns over imminent war with Iraq.
NAHB’s forecasts still show positive (but weak) economic growth for the final quarter of this year and smoother acceleration during 2003. But these forecasts are vulnerable to unpleasant surprises on a number of fronts, particularly the situation with Iraq.