Are We Booming Yet?

This week’s initial unemployment claims were up a bit to 399,000, suggesting that tomorrow’s unemployment report may not look too good. There have been a few other worrying signs about the economy lately: manufacturing activity may have begun slowing again a bit, and consumer confidence is falling, not rising.

We’re supposed to be in the midst of a couple of high-growth quarters right now, with many economists’ forecasts in the 4%-5% range for economic growth in the third and fourth quarters of 2003. Business spending is indeed up strongly compared to a year ago, but otherwise the preliminary data sure doesn’t paint a picture of a very strong economy.

I wonder if we’re starting to see a reversal of the pattern that has kept the US economy going over the past couple of years. In 2001, 2002, and early 2003, strong consumer spending made up for weak business spending. I’m starting to have the hunch that the second half of 2003 and 2004 will feature the opposite pattern – strong business spending with weak consumer spending, as consumers worry more and more about their debt and their jobs.

We’ll know a little more tomorrow morning with the unemployment report…