Other factors will, however, hold growth back. Other indicators tell a similar story. Factory orders, excluding those for transportation equipment, fell in March for the fourth straight month. In the week ended April 28th, the number of US workers filing new claims for state unemployment benefits rose to 421,000, the highest level in more than five years. All of these factors will begin to erode consumer confidence and therefore depress private consumption in the coming quarters.
Investment spending is also likely to fall further, except in the construction sector.
But recent announcements of sharp cutbacks in capital spending by many publicly traded firms suggest that business and software investment has further to fall. Overall, we believe that much of the optimism expressed by commentators in recent weeks that the US economy has bottomed out is sadly misplaced. The Economist Intelligence Unit Limited 2001. All rights reserved.