Economic Growth

WASHINGTON -- The financial turmoil that began with the seemingly narrow meltdown in subprime mortgages is now forcing both policymakers and Wall Street analysts to scale back their expectations for growth in the overall economy. Most economists still predict continued economic growth for the rest of the year and into 2008, but many are trimming their forecasts and warning that even their somewhat darker views could be too rosy. Global Insight Inc., a forecasting firm in Lexington, Mass.

What if, during William Howard Taft's presidency, Congress had enacted laws that would predetermine all spending well into the 21st century? As economic growth swelled government revenues, legislators would continue to prescribe - from six feet under - how to divvy the spoils. Their well-worn policy wheels would run over future elected officials and voters, preventing them from embracing new priorities unless they simultaneously rescinded past promises written into the law. Unable to see their way out of this logjam, the next generation of Republicans and Democrats would only make it worse - waddling back and forth between promising even more benefits relative to what could be delivered and enacting low-cost but ineffectual policies to achieve symbolic results.

WASHINGTON -- The economy roared back from a midyear slump by growing at an annual rate of 3.5 percent in the final three months of 2006, the government reported yesterday. The economy opened last year on a strong note, growing at a 5.6 percent pace, the fastest spurt in 2 1/2 years. But it lost steam to a 2.6 percent pace during the spring and declined to about 2 percent last summer. Nevertheless, inflation fell from an annual rate of 2.2 percent in the third quarter to 2.1 percent in the fourth quarter, the Commerce Department said.

DECIDING what to do with the budget surpluses is the major policy question facing this Congress. Projected surpluses of several trillion dollars over the next decade have created a clamor of demands: cut taxes, save Social Security, pay down the national debt, and increase education, transportation, job training and other federal programs.Congress' first priority should be ensuring continued economic growth. The best way to extend a steady recovery far into the next millennium is by paying down the $3.7 trillion in national debt.

THE DEPARTURE of Treasury Secretary Robert E. Rubin could have been cause for alarm. He is, after all, the heaviest hitter on Team Clinton, the chief architect of much that has gone right. Had Mr. Rubin departed during the impeachment scandal, it might have destabilized Wall Street.But Mr. Rubin waited. It was known he wanted to get back to private finance. So Wednesday, calm confidence greeted President Clinton's announcement of Mr. Rubin's resignation and the the nomination of his deputy, Lawrence H. Summers, as successor.

HERE'S SOMETHING that will surprise you, about the supposedly gloom-and-doom outlook for Social Security. By one official estimate, there's no Social Security problem at all.The forecast you hear most often says the Social Security trust fund will run out of money in 2034. That comes from Social Security's trustees, who make annual projections about the system's health.But Social Security's trustees make three projections, each based on a different assumption about economic growth.In public discussion, you always hear the "intermediate" projection, which warns that the trust fund will be used up by 2034.

NEW YORK -- It's Amateur Night at the Apollo Theatre, and a parade of aspiring black stars is getting ready to face one of the toughest crowds in show business.Apollo audiences have seen it all over the years: Jazz divas such as Billie Holiday and Sarah Vaughan, a kid named Stevie Wonder, a mystery group called the Jackson 5. But tonight there's something different on stage: a white teen-ager who leaps out of the crowd to join in a hip-hop dance contest.As he shakes and rolls, a powerful, impromptu chant rocks the room: "White man in the house!"

WASHINGTON -- Courting accusations of economic recklessness from Democrats and fiscal timidity from his Republican rivals, George W. Bush will unveil today an economic plan that includes modest reductions in tax rates, an end to estate taxes and a reduction in the "marriage penalty" levied on some two-income couples.The Republican presidential front-runner is already facing criticism from his Republican foes that his proposal is far too modest, because he has rejected the sweeping changes to the tax code that other candidates have embraced.

LAST WEEK President Clinton announced that U.S. budget surpluses would be $1 trillion more than expected over the next 15 years, enough to pay off the national debt by 2015. The closest the nation has been to being debt-free was in 1835, during Andrew Jackson's administration, when the debt was $33,733.05.How reliable are the economic projections on which the surplus forecast is based? What would be the impact of paying down and ultimately erasing the debt? What would it mean for economic growth?

THE STOCK markets got a burst of energy last week as some major corporations released strong earnings reports. High-technology and telecommunications firms such as International Business Machines Corp., Microsoft Corp. and Qualcomm Inc. posted better-than-expected numbers, and many nontech firms did well, including Towson's Black & Decker Corp. There were some exceptions, of course -- Exxon Corp. and Compaq Computer Corp. were among the megafirms reporting slowdowns or disappointing numbers -- but the overall corporate-earnings picture appeared bright.

Economic growth slowed in the Baltimore region last year, but it was not among the nearly one-third of metro areas with contracting economies. That's what the Commerce Department estimates in a report released Thursday about gross domestic product in metro areas, a key measure of economic activity known commonly as GDP. The Baltimore-area economy grew 1.1 percent in 2008, compared with a 1.5 percent increase each of the previous two years. The figures are adjusted to account for the sapping power of inflation.

President Barack Obama is expecting a breathtaking $1.75 trillion federal budget deficit for the coming fiscal year and making an even more amazing promise - to cut the annual shortfall in half by the end of his first term. Closing that deal will require all of the president's persuasive skills and a large measure of luck. It's a monumental task, and Mr. Obama is hoping for the current deep recession to end and brisk economic growth - twice the rate of the Bush years - to resume next year.

WASHINGTON - As bad as yesterday's grim government report on economic growth was, it points to even worse times ahead. The collapse of exports, industrial production and the inability of companies to sell their products all portend an even deeper contraction as the U.S. and global economies sink further in the weeks and months ahead. The Commerce Department reported that the U.S. economy contracted 3.8 percent in the final three months of last year, the biggest such quarterly shrinkage in almost 27 years.

WASHINGTON - The U.S. economy grew at a faster rate in the first quarter of this year than previously thought, the government reported yesterday, further muddying the question of whether or not the sluggish U.S. economy is in recession. Between January and March, the U.S. economy grew by 0.9 percent, not the 0.6 percent projected a month ago, the Commerce Department said. Normally, such a slight upward revision wouldn't merit much attention. But economists and policymakers are confounded by today's economy, which is being dragged down by a deep housing slump and soaring energy prices.

Democracy does not cultivate a taste for deferred gratification: Politicians eyeing the next election want to give people what they want sooner rather than later. And in a time of economic turmoil, the impulse to do something immediately is even stronger. But the haste is misplaced. In the current climate of panic, policymakers need to learn patience - and they need to learn it right now. A couple of alleged crises are getting all the attention at the moment. The first is the risk of a recession.

JAKARTA, Indonesia -- Former President Suharto, an army general who rose to power in Indonesia with the slaughter of hundreds of thousands of people and ruled for 32 years during an era of rapid economic growth and extraordinary graft, died yesterday in Indonesia. He was 86. Suharto's unyielding opposition to communism won him the backing of the United States during the height of the Cold War, although he was one of the most brutal and corrupt rulers of that era. He governed the world's fourth-most-populous nation with a combination of paternalism and ruthlessness from 1965 until he was ousted in spring 1998.

FAIRFAX, Va. -- A consensus is building that America's economy is sliding - perhaps plummeting - into recession. In December, the unemployment rate jumped to 5 percent, up three-tenths of 1 percent from November. And, of course, investors are now growlingly bearish. To no one's surprise, politicians are rushing in with plans for helping the economy. Democrats and Republicans in Congress last week reached a tentative agreement to put more money into the hands of ordinary Americans in hopes that they will spend - not save - it, thereby boosting the overall economy.

WASHINGTON -- As President Bush and Congress weigh the need for a stimulus package to ensure that the slowing economy keeps growing, experts warn that there's insufficient evidence the effort is needed and that it could do more harm than good. No one can yet say with certainty that the U.S. economy is about to enter a recession, defined as two consecutive quarters of negative economic growth. And by the time that becomes clear, a stimulus plan could be too late to do much immediate good.

WASHINGTON -- The U.S. economy edged a step closer to recession in December by producing only 18,000 new jobs, its worst performance in four years, and sending the unemployment rate to a two-year high of 5 per- cent. The meager job gains, reported yesterday by the Labor Department, were much weaker than expected and showed the toll that tightening credit, a slumping housing market and a staggering stock market are taking on the nation. The worst of the job-market trouble was concentrated in construction, which shed 49,000 jobs, and manufacturing, which lost 31,000.

Afraid that the state could be headed for a recession, a committee of General Assembly leaders recommended last night cutting state spending increases by almost half. If Gov. Martin O'Malley follows the benchmark set by the Spending Affordability Committee - a bipartisan group of lawmakers assigned to keep state spending from exceeding economic growth - Maryland would spend 4.27 percent more on public services than it did last year, a smaller increase than in all but five of the past 25 years.