- The Washington Times - Saturday, October 4, 2003

Several reports issued last week on more recent economic activity indicate that the post-recession recovery may finally have begun its long-awaited acceleration. Even the long-dormant labor market is showing signs of reviving, according to a favorable report on September job activity released Friday.

The Commerce Department’s estimate for second-quarter GDP, released Sept. 26, reported an upwardly revised annual growth rate of 3.3 percent. That represented a significant increase from the 1.4 percent annual growth rate that prevailed in both the fourth quarter of last year and the first quarter of 2003. Even more important, final demand increased at an annual rate of 4 percent for the second quarter, markedly faster than the growth rates of 1.1 percent and 2.3 percent for the fourth and first quarters, respectively.

Significantly, after declining for seven months in a row, nonfarm payrolls increased in September. And the increase was broad-based. The Labor Department’s business-establishment survey, which had reflected job losses of more than 500,000 between January and August, showed a net gain of 57,000 jobs in September. In addition, the reported job losses for August were revised downward. Also, while manufacturing industries reported job losses for the 38th month in a row, the 29,000 lost in that sector last month were the fewest since July 2002. Moreover, jobs in the construction industry increased for the seventh month in a row in September, and service-providing employment in the private sector increased by 89,000.

Meanwhile, for all the complaints from state officials over the supposedly dreadful spending cuts that fiscal austerity would require, state government payrolls also increased in September. Indeed, September’s state government payrolls had 140,000 more employees than the monthly average during the states’ golden year of 2000. While local government shed 27,000 jobs in September, local government payrolls still were 622,000 jobs above 2000’s average monthly total.

Also, the Institute for Supply Management (ISM) issued two favorable reports last week. The ISM’s review of September manufacturing activity reported an increase for the third month in a row. Thirteen of the sector’s 20 industries reported growth. The ISM manufacturing report declared that “the strength in new orders during September is a very positive sign.” Meanwhile, the ISM said its non-manufacturing survey for September “indicates continued strong growth.” Fourteen non-manufacturing industries grew in September; two reported no changes; and none contracted.

With many economists now estimating that the economy grew by 5 percent or more during the third quarter, the latest data for September from both the ISM and the Labor Department strongly suggests that momentum is building for a solid second-half performance this year. To be sure, economic acceleration has had fitful starts in the past. But now that monetary and fiscal policies are operating at full throttle, the odds that this recovery is for real are much better.

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