NEWS AND COMMENTARY
July 6, 2001
... And Coming
Today's unemployment announcement by the Labor Department reiterates what we've been telling you for the last few months. Despite sporadic reports containing improving economic data, the economy is still suffering one of its worst downturns in decades. After working its way down to 4.4% in May, the unemployment rate surged back up to 4.5% in June. What's worse is that the number of jobs cut last month zoomed well above economists' expectations to 114,000. And the outlook is getting worse, not better.
Rising unemployment will shatter consumer confidence once again. And it will continue to zap consumer spending. Even major Wall Street economists are starting to blow the whistle on the economy. Richard Berner, chief economist at Morgan Stanley, predicts that the economy will slip into a "small recession with economic output contracting in the second and third quarters."
We think the recession will last much longer than that, but we commend Mr. Berner for speaking out to warn investors that the US is facing tough times ahead. Too many Wall Street suits have been pooh-poohing recession warnings, and their investors' assets will be the worse for it.
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