Economy Growing, But Slower

Posted: January 12, 2001

While the national economy is slowing down, it still seems to be growing, not shrinking. And growth is likely to pick up in the second half of 2001, according to the president of the Federal Reserve Bank of Philadelphia.

"Clearly, the economy has slowed down," Dr. Anthony M. Santomero told reporters yesterday.

But, he added, "the data I have seen does not suggest we are in a slowdown with a zero growth rate. . .We're seeing softening the first half of the year. I think we'll see growth in the second half."

Santomero's comments followed an annual Chamber of Commerce breakfast on the outlook for the regional economy.

Santomero said the region has underperformed the national economy over the record expansion of the past nine years. He offered a four-point "economic priority list" for the region to improve:

* Building up the quality of the labor force through better education and recruiting.

* Fostering increased entrepreneurship and new job creation.

* Improving the region's "dated infrastructure" by trying to address transportation and congestion problems.

* Improving the performance of local government and lowering taxes.

His outlook was consistent with the so-called "soft landing" that the Federal Reserve is reportedly seeking as the economy cools down after nine straight years of economic growth, starting in 1992.

The gross domestic product - a measure of the value of all goods and services produced in the United States - grew by more than 5 percent in calendar 2000.

Even with a slowdown, most economists are projecting continued growth this year, in the 2 to 3 percent range.

But the events of the past six months - including sharp drops in the stock market, particularly among Internet and other high-tech companies; hefty boosts in energy prices; a decline in auto purchases; and reportedly weak Christmas retailing - have some authorities worried that the country might slip into recession. Economists say a recession is an actual decline in overall production, lasting six months or longer, typically marked by worker layoffs, declining corporate profits and further slides in stock prices.

Santomero's relatively optimistic outlook mirrors the results of several recent surveys - a December poll of economic forecasters known as the Livingston report, and two surveys released at yesterday's breakfast by Sovereign Bank. One was a random sample of 467 bank customers and the other was a survey covering 519 Chamber of Commerce members. Despite the stock market's downturn and recent signs that economic growth is slowing down, 51 percent of the surveyed bank customers said they were better off economically than they were a year ago.

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