Bully
for the Economy
If you
asked someone about the condition of the economy since early 2001, you would
likely hear descriptions such as “weak,” “soft,” or just plain
“bad.” That view has persisted.
A Harris poll found that in mid-2002, only 39 percent of Americans said they
“feel good” about the nation’s economy, down from 47% in 2001 and 68% in
2000.1 The consumer confidence index fell
repeatedly in 2002.2
Yet the economy has had many bright spots that attracted less attention. The
faltering stock market and the war on terrorism have pushed plenty of good news
off the front page. Consider these positive aspects of the U.S. economy.
Gross
Domestic Product
After contracting for three quarters in 2001, the economy appeared to begin a
long-term growth trend late that year.3 Despite
talk of a recession, the economy grew 2.7 percent in the fourth quarter of 2001
and a noteworthy 5 percent in the first quarter of 2002 — when most people
thought times were darkest and consumer confidence was at low levels.4
Unemployment
Although the percentage of unemployed workers briefly surpassed 6 percent in
April 2002 for the first time since 1994, it spent most of the year in the 5.7
percent range.5 Only a decade ago, it was 7.5
percent.6 A 6 percent unemployment rate is
still considered to be the sign of a strong economy and, according to some
economists, is a more realistic rate for the United States in contrast to the
remarkably low unemployment rate during the late 1990s.
World Comparison
• Unemployment in the Euro zone hasn’t fallen below 8 percent during the
past decade.7
• Since 1992, U.S. industrial output has outpaced that of France, Germany, the
United Kingdom, and Japan.8
• After three recessions during the past decade, the once-mighty Japanese
economy is now viewed as the weakest link in the global economy. The nation’s
banks are plagued by more than $420 billion worth of bad debts, brought on by
collapsing equity and real estate prices.9
How the U.S. economy will perform in the coming months is still difficult to
predict. Being prepared with a sound financial plan can help you handle whatever
occurs.
1) PollingReport.com, June
14, 2002
2) The Conference Board, September 24, 2002
3) The Wall Street Journal, September 17, 2002
4) Bureau of Economic Analysis, September 27, 2002
5–7) Haver Analytics, September 4 and 6, 2002
8) Investor’s Business Daily, September 23, 2002
9) The Wall Street Journal, September 27, 2002
©
2002 Emerald Publications
