Two economic reports released Friday gave a somewhat subdued picture of the pace of U.S. economic growth. Retail sales were up in August while consumer sentiment unexpectedly fell.
Consumer confidence as measured by the University of Michigan fell slightly in August, the third decline in four months. The report said confidence may be falling because the expanding economy is not yet creating new jobs. Over the past seven months of increasingly robust growth the economy has lost 600,000 jobs.
Retail sales rose less than forecast in August with the Commerce Department index rising .6 percent. Financial markets had anticipated a much sharper rise. Economist Brian Wesbury, speaking from a noisy Chicago Board of Trade, says a weak automobile sector was to blame.
"The real reason for that is that auto sales [in August] were just not as strong as they appeared to be," pointed out Mr. Wesbury on CNBC television. "The bottom line however is that retail sales are still very strong. In the last three months they've increased at a 12 percent annual rate. And that tells me that the third quarter is going to be somewhere around three percent real [economic] growth."
Other forecasters are revising upwards their predictions for the U.S. economic growth. Jim Smith of the University of North Carolina business school anticipates 5 percent economic growth next year. Growth is currently 3 percent. Mr. Smith believes the U.S. economy is beginning to create new jobs.
"I expect somewhere between 2.5 and 3 million new jobs to be created sometime between now and election day next year [November 2004]," he said.
The current recovery from recession began nearly two years ago. Lack of job creation has been the weakest element in now strengthening recovery.