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"A View From Across The Pond" an Englishman's personal view of the week's news in the USA
- from Erithacus
The cut in interest rates of 0.5% by the Federal Reserve this week failed to produce the spark of renewed optimism that some had expected. Although the Dow Jones index finished the week 1.9% up, the Nasdaq saw its worst week this year and had lost 4.3% of its value by close on Friday. Worries about availability of capital funding weighed heavily on the minds of many investors, and the damage this could cause to technology-related stocks in particular was, according to some experts, a major factor in the Nasdaq’s fall. Other worries include the continued lack of confidence by consumers generally, and the reluctance to spend is continuing to hit retail and manufacturing industries.
Reports from some analysts outside the US, however, indicate that worries about the economy may be largely unfounded. In the UK, the National Institute of Economic and Social Research looking at the global economy believes that risks of a US recession are substantially overstated. A slowing of growth is both inevitable and desirable, but tight control of interest rates by the Federal Reserve and prudent economic policy by the new US administration will head off any serious slowdown. Broad agreement of these views also came from the National Bureau of Economic Research Inc., a private, non-partisan group based in the US.
George Bush, now pushing his promised tax cuts, likened America’s economic boom in recent years to a party. "But," he said, "a lot of people feel as if they have been looking through the window at somebody else's party....... It is time to fling those doors and windows open and invite everybody in." Sceptical Democrats are saying that the tax cuts are too large, while many of Bush’s fellow Republicans argue that the cuts could be bigger. An indication, possibly, that he really has got it just right.
Other economic indicators, often ignored in favour of the stockmarket indices and consumer spending on retail products, are indicating that a true recession is unlikely. Service industries mostly report a much less gloomy picture, and even leisure industries reported unseasonally high sales. The restaurant industry, often one of the first hit when the consumer is financially nervous, is reporting record sales. Despite unusually harsh winter weather in many areas, the Brinker chain of 1060 restaurants reported 27% higher earnings for the quarter ended 27th December and predicted even better results for the current quarter, and the Ruby Tuesday chain of 500 restaurants reported an increase of 30%. Even a few retailers in the worst-hit retail sectors are managing to buck the trend. American Eagle Outfitters operating 566 stores in 47 states are reportedly showing increasing sales of between 2% and 14% in recent months while other clothing retailers’ sales have generally decreased by similar percentages. The focus of American Eagle’s range is at the 14 to 24-year-olds, confirming analysts’ views that "teenagers are somewhat insulated from the effects of an economic slowdown".
Finally for this week, we see that at least one enterprising individual is keen to cash in on continued interest in Bill Clinton and events of his presidency. And why not? But the book now on sale for $40 and featuring more than 200 photographs documenting Clinton’s presidency, contains solely those taken by Robert McNeely while he served as President Clinton's official photographer from 1992 to 1998. Being produced on government time and at taxpayers’ expense, it does seem a little hard that the American public is now being asked to pay again to see the photographs. Oh, well. That’s free enterprise at its best, I suppose.
4th February 2001
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