SURGING AHEAD

November 26, 1999
		Following this background report, Paul Solman of WGBH-Boston and four regional economic experts discuss America's continuing economic boom and its future growth potential.

Nov. 26, 1999: Economist analyze America's surging economy Nov. 16, 1999: Economist analyze the latest hike in interest rates. Nov. 5, 1999: Economist discuss the unemployment rate and its influence on the stock market Oct. 15, 1999: The volatile Dow Jones average and its effect on the economy. Sept. 27, 1999: The winning and losing of day trading Sept. 6, 1999: Overworked America? Sept. 3, 1999: Experts discuss the current wage gap between workers and CEOs July 2, 1999: Economics experts discuss jobs in the United State March 5, 1999: A look at the U.S. economy's steady growth. Browse the NewsHour's coverage of Economy and Business indexes     Federal Reserve U.S. Treasury Department International Monetary Fund

WOMAN: These were gift wrapping. PAUL SOLMAN: It's the day after Thanksgiving, and typically that means sounds like these. Malls across America are teeming with holiday shoppers, buying everything from purses to Pokemon. CONSUMER: I think every year I end up spending more each Christmas, and since I have a few more dollars in the bank, I probably will spend even more this year, too. PAUL SOLMAN: And lately American consumers have been shopping with even more vigor than usual. CONSUMER: I think everybody's in a good mood. By the looks of the mall, it looks like it's full of people. PAUL SOLMAN: As we approach the once dreaded date of Y2K, the U.S. economy continues its seemingly inexorable expansion. Thanks to spirited consumer spending, the economy barreled ahead in the third quarter at a growth rate of 5.5 percent. This pushed the Gross Domestic Product, the total output of goods and services, to $8.9 trillion. The quarter was the best for growth since the end of last year. And today's announcement that personal incomes shot up at the highest rate in five and a half years comes as the nation's unemployment rate remained near a 30-year low. It now stands at 4.1 percent. Meanwhile, initial jobless claims fell 13,000 last week, suggesting increased demand for workers. No surprise then that the University of Michigan's Consumer Confidence Index was up at 107.2, a 4 percent rise from mid- October. The only slight shadow in the picture appears to be inflation, which, according to one Commerce Department measure, is up at a rate of 1.7 percent for the first three quarters of this year, compared to 1.1 percent for the three quarters previous in 1998. Presumably to keep that inflation in check, and slow the economy somewhat, the Federal Reserve last week raised interest rates for the third time this year. But consumers seem undeterred. In the current fourth quarter, forecasters see economic growth in the 4 percent to 5 percent range-- most of it driven, as usual, by consumer spending. This is considerably higher than the generally agreed upon speed limits for the economy-- a 3 percent growth rate. For years, the Fed has been thought to believe the economy can grow no faster without sparking worrisome inflation. But the bells are ringing, and on Wall Street, supposedly a predictor of future economic performance, stock prices have continued to rise. And today, the technology-laden NASDAQ Index scaled a new peak. It is now up 57 percent for the year.

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