In manufacturing, as in other sectors of the economy, workers are stretched to the limit. The goal: to produce more and more goods with fewer and fewer employees. Part of the formula involves the so-called 24/7 culture, in which employees remain interminably wired to the workplace with beepers, cell phones and other gee-whiz electronics. There are precious few signs the pace will slow soon. But watch for Thursday’s report on January orders for durable goods to show modest slippage of 0.8 percent. That’s the prediction of economist Lynn Reaser, who says the number will simply reflect a payback from the astronomical 5.5 percent leap in December. “These numbers are notoriously volatile,” said Reaser, of Bank of America. “In December, orders from the Defense Department were up 36 percent, and civilian airline orders skyrocketed by about 80 percent.” Making allowance for such one-time factors, Reaser said manufacturing “continues to improve. The auto industry is running near record levels, exports are picking up, and technology budgets are being unlocked after a freeze by some companies related to the Year 2000 rollover.”
INFLATION
THERE’S NO STOPPING IT
Despite favorable news on inflation last week, as both primary measures of price pressures remained tepid, the outlook for interest rates is roughly equivalent to the water torture. In his latest testimony to lawmakers on Capitol Hill, Federal Reserve Chairman Alan Greenspan escalated the battle. He said efforts to cool consumer buying–stoked by outsize gains in the stock market–are becoming more pressing. Even after four interest rate increases in eight months, the Fed chairman said there is little evidence to suggest that U.S. economic growth is slowing. Chicago investment manager William Hummer said there are few indications that worries about price pressures will depart the stage anytime soon. “The winds of inflation are irreversible,” said Hummer, of Wayne Hummer & Co. “There is no chance for a respite, and the Fed will raise rates in March and beyond.” He said medium-term interest rates, those for durations of 5 to 10 years, which have been hovering just above 6.5 percent, will move past 7 percent later this year.
GROWTH
FOCUS ON PURCHASES
The focus for Friday’s report on gross domestic product won’t be on the revision to fourth quarter growth: the estimate is expected to fall near the superheated 5.8 percent rate of expansion reported a month ago. Discussion will center instead on whether consumers finally are scaling back on purchases, as well as the continued strength of U.S. exports.
WALL STREET
A MUCH-NEEDED BREAK
Stock, bond and commodity markets, as well as markets for options and futures, are closed Monday for Presidents Day. Also shuttered are government offices, banks and some businesses. Meanwhile, the stock market takes a much-needed respite, as major averages struggle with brutal losses. A vicious sell-off Friday sent the Dow Jones industrial average sinking more than 295 points, to 10,219.52, a depth not plumbed since mid-October. Optimists remain hopeful that the worst is over, and that a rising tide of high-technology issues can lift all boats, including some of Wall Street’s leaking tubs.
