Rumors of the economy's demise appear to have been greatly exaggerated, judging by this week's economic data. There is now virtually no chance of recession in the near term as second-quarter GDP is likely to be in positive territory, owing largely to an unwinding of the inventory correction and continued modest growth in consumer spending. Durable goods actually fell when transportation orders were included.
Some analysts expect the housing boom to soon peak, because mortgage rates have been rising.
The Labor Department reported Thursday that unemployment claims rose to their highest level in five years while the Commerce Department said help-wanted advertising fell to its lowest level since April 1993. Friday, the University of Michigan said its consumer sentiment survey fell in April. Thursday's employment cost index report also contained some potential inflationary implications. Inflation fears were the prime reason behind the European Central Bank's decision to leave interest rates unchanged this week. Among others, Treasury Secretary Paul O'Neill and International Monetary Fund managing director Horst Koehler expressed concern at the ECB's recalcitrance to cut rates in order to spur more growth.