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For Many, Economy's State Lies Between Partisan Views

August 08, 2004|Don Lee | Times Staff Writer

President Bush has been saying that the U.S. economy has "turned the corner." Democratic presidential candidate Sen. John F. Kerry, in the wake of Friday's poor jobs report, quipped that it was more like a U-turn.

But around the country, the feeling seems to be that neither assessment is quite on the mark.

The nation's economy, by most indications, is continuing to expand at a respectable pace. Business investment remains solid. Factories are churning out goods. And homes are selling fairly briskly.

Yet for all that, the economy can't seem to get much real momentum going.

If anything, the events of recent months -- soaring oil prices, continued unrest in Iraq and terrorist alerts -- have made many employers and workers nervous, leading to slower consumer spending, shocks to the stock market and sagging job growth.

That picture was borne out in dozens of interviews over the last two days with employers and workers across the country.

Although hardly a scientific sample, these voices underscore what a welter of recent economic data also suggests: The U.S. economy seems to be moving along neither robustly (as Bush has hinted) nor terribly slowly (as Kerry suggested), but at a middling pace where most everybody is treading cautiously.

At Dan's Vitamin House in Houston, owner Dan Breckenridge, 45, spoke over the whir of blenders mixing smoothies for about a dozen customers.

"I don't know why people are complaining about the economy," he said, nodding toward the line for drinks. "It's not that bad."

Breckenridge has been in business at this strip mall for 24 years. So confident is he in the future that he recently renewed his lease for an additional five years. He usually employs a staff of three, and said he had no plans to cut back. But neither is he looking to hire additional workers.

"To me, the economy's not the best, but it's not the worst," he said, gliding his hand, palm down, through the air. "It's just level."

Norman Black, a spokesman for Atlanta-based United Parcel Service Inc., said the economy looked pretty good from his company's vantage point. Businesses are busy, and that means more work for firms like his.

Still, Black was circumspect in his assessment of the economy's durability.

"There are a lot of things out there that people are concerned about, including rising fuel prices," he said. "This is certainly not the go-go '90s."

For now, UPS and many other corporations are still flush with profits, which have supported hearty business investments. Industrial activity also has been growing, with new orders for factory goods rising in June at the fastest clip in three months.

But consumer spending of late has been weakening, largely because of the ill effects of higher gas prices and rising interest rates.

And that's crimping overall economic expansion.

Growth in gross domestic product, or GDP, slowed to 3% in the second quarter after swelling at an annual rate of 4.5% at the start of the year.

By recent historical comparisons, consumer confidence remains fairly high, but it seems clear that many have cut back in ways big and small.

Jerry Addison, a 31-year-old systems analyst in Seattle, was among the throng at Pike Place Market on Friday, nibbling on a sandwich while waiting for his girlfriend.

He had a bouquet of flowers beside him on the bench.

"I just bought these flowers for my girlfriend for 15 bucks," he said.

"They are gorgeous, better than what you get from a florist, but I deliberately made the choice to come here and get them, rather than pay $40 to have a birthday bouquet sent to her office."

Thousands of miles away in Miami, caterer Jorge Mena has noticed the trend: People are opening their wallets -- "We have had the best summer we have ever had," he said -- but not in a way that's unrestrained.

"In the '80s and '90s, it was a whole different atmosphere," said Mena, whose business employs 10 people in the kitchen and six in the office.

These days, he said, "everybody is party-oriented, but they are also budget-oriented. They want what in Spanish are called the three Bs: bueno, bonito and barato. Good, beautiful and cheap."

Although some analysts expect consumer spending as well as the GDP to pick up a bit in coming months, for most people, the top economic indicator is jobs -- and on that score, the last two months have been lackluster.

The Labor Department on Friday reported that employers nationwide had added 32,000 net new jobs in July, a fraction of the 215,000 to 250,000 economists had expected.

That was largely because of tepid hiring in the service industries, such as retail and financial services. What's more, the government revised payroll gains in June to 78,000 from 112,000.

The poor showing, after a burst of hiring in the spring that seemed to allay fears of a jobless recovery, is likely to rekindle concerns about the underlying health of the economy.

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