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President George W. Bush may turn out to be the top economic forecaster in the country.
About a month ago he told reporters, “We’re not in a recession, we’re in a slowdown.” At a White House news conference a few weeks later, despite the fact that reporters pressed him to use the “R” word, Mr. Bush refused. And on Friday, after the most recent jobs report -- which produced a much-smaller-than-expected decline in corporate payrolls, a huge 362,000 increase in the more entrepreneurial household survey (the best gain in five months), and a historically low 5 percent unemployment rate (4.95 percent, to be precise) -- the president told reporters: “This economy is going to come on. I’m confident it will.”
We’re in the midst of the most widely predicted and heralded recession in history. Problem is, so far it’s a non-recession recession.....
The bad news bears always focus on areas of economic weakness. But parts of the economy are doing splendidly. This includes agriculture, energy, export firms operating in the global boom, and all manner of private-sector business, professional, health, and education services. Incidentally, these are the exact sectors producing the highest-paying jobs. What’s more, at 154 million employed, the civilian labor force just hit a new all-time high.
Another significant data point: Corporate profits are outperforming all expectations. With three quarters of the S&P 500 companies reporting, profits outside the banking system have increased 10 percent over a year ago.
Once again President Bush has proven to be a far wiser and better man than his critics.
The good news just keeps on coming:
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Today’s ISM report for non-manufacturing (services) unexpectedly shot up to 52 from 49.6 in March, and a 47.8 percent first-quarter average. (Readings above 50 percent signify growth.) Recession bears are running for cover on this one. Coming off Friday’s jobs report, with 363,000 new household jobs, something is clearly going on here. That something could be a bottoming of the economy, sometime this past winter. We’re not totally out of the woods just yet. But the news is sure getting better. (Even the NYT’s Paul Krugman is backing off recession in his column today.)
Over in the Treasury market, the 10-year note is now trading up at 3.87 percent. During the recession winter, it was 3.3 percent. If the economy is coming out of the downturn, then the 10-year will make a move up to 4 percent or higher. The stock market is bogged down this morning, digesting the breakup of the Microsoft-Yahoo! deal. But stocks have enjoyed a great run since mid-March.