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Reports that the economy may be heating up faster than had been expected cap a week of positive reports.
Compiled from Times wires
© St. Petersburg Times, published March 2, 2002
WASHINGTON -- The U.S. economy not only has begun to grow again after last year's slump, but it is apparently doing so far more quickly than the most optimistic forecasters were expecting just a few weeks ago, according to several economic reports released Friday.
Notably, a report showing the first increase in manufacturing activity in 18 months capped a week of positive economic developments and drove the Dow Jones Industrial Average to its highest level in six months.
The Dow enjoyed its biggest one-day gain in five months, soaring 262.73 points, or 2.6 percent, to close at 10,368.86. The last time the Dow racked up more points in a day was Sept. 24, when it rose 368.05.
The Nasdaq Composite Index soared 71.25, or 4.1 percent, to 1,802.74, claiming its biggest point win of the year. The last time the Nasdaq had a larger daily point gain was Dec. 5, when it climbed 83.74.
The Standard & Poor's 500 index rose 25.05, or 2.3 percent, to 1,131.78.
Friday's buying spree also helped the market post big weekly gains. The Dow rose 400.71, or 4 percent. The Nasdaq rose 78.21, or 4.5 percent, while the S&P advanced 41.84, or 3.8 percent.
Private economists said the new economic numbers indicated the recession probably has ended and will be recorded as one of the mildest in U.S. history.
"With this mounting evidence of economic recovery, we are confident the recession has ended and expansion is under way," said Richard Yamarone, economist with Argus Research Corp.
The Institute for Supply Management, formerly known as the National Association of Purchasing Management, reported that its index of business activity for the first time in 18 months moved up into a zone that signifies growth.
The group's index jumped to 54.7 in February from 49.9 in January, suggesting the battered manufacturing sector, hardest hit by the recession, is pulling out of a long slump. An index above 50 signifies expansion, while a figure below 50 shows contraction.
That news, along with a government report this week showing orders to U.S. factories for big-ticket items rose a bigger-than-expected 2.6 percent in January, indicate that "the manufacturing recession is coming to an end," said National Association of Manufacturers president Jerry Jasinowski. Momentum is building for a manufacturing turnaround in the early months of 2002, he said recently.
In more good news, consumer spending, rose 0.4 percent in January after being flat in December, the Commerce Department said. At the same time, Americans' income, including wages, interest and government benefits, also increased by 0.4 percent, the largest advance in six months, providing the fuel for spending in the future, economists said. Income growth in January, which followed a 0.3 percent rise in December, in part reflected cost-of-living adjustments to retirees' Social Security checks as well as some other benefits payments from the federal government.
"The consumer is showing no signs of letting up and with income rising as well we should expect that to continue," said Joel Naroff of Naroff Economic Advisors.
In another good sign for the economy, spending on construction projects rose 1.5 percent in January, the biggest gain in a year, after advancing 0.5 percent in December. Construction spending has held up fairly well during the slump, aided by low interest rates. More recently, mild weather also has been a factor in the stronger activity.
The reports are consistent with the cautiously upbeat economic assessment Federal Reserve chairman Alan Greenspan provided to Congress on Wednesday. His message: The country is on the road to recovery, but there still are some possible potholes.
-- Information from the Associated Press, Chicago Tribune and Washington Post was used in this report.