- THE MAGAZINE
Only 16% of those responding said the movement of U.S. jobs to overseas locations has had a significant effect on U.S. job growth, while 39% said it has had a "meaningful but not significant impact" and 43% said it has had little or no impact. Despite the perplexingly weak job growth, the economists also are sticking to their forecasts that the economy will continue to grow at a healthy pace this year, though they think the Federal Reserve will put off thoughts of jacking up interest rates.
Underscoring their expectations about overall economic growth, the Commerce Department reported that retail store sales increased 0.6% in February from the month before on a seasonally adjusted basis.
Meanwhile, sales in January and December were revised higher. The February increase reflected a 2.7% jump in sales at motor vehicles and parts dealers, the largest advance in that category since last March. However, demand in other categories was mixed, leaving sales excluding autos unchanged from a month earlier. That point troubled some economists, who were expecting an increase.
On balance, economists said the latest batch of sales data was consistent with the view that consumer spending has accelerated modestly so far in the first quarter from the fourth-quarter growth rate of 2.7%. That, in turn, is leading most forecasters to maintain their estimates of overall economic growth, despite a lackluster pace of job growth that eventually could become a drain on household spending power.
The survey of economists, conducted late last week and early this week, showed the nation's gross domestic product - a broad measure of the output of goods and services - is expected to grow at a 4.5% annual rate in the first quarter. The economy is expected to grow at a 4.4% rate during the second quarter, 4.1% during the third quarter and 4% during the fourth.
"The consumer is on a good solid track. It is not booming, but it is a good solid track," said Richard Rippe, chief economist of Prudential Equity Group. On average, the economists estimated that the number of U.S. jobs lost by movement of operations overseas since 2001 has been 188,000 in the services sector and 502,000 in manufacturing, for a total of 690,000. That's a small fraction of the 58.6 million in overall layoffs that companies undertook between 2001 and 2003. The vast majority of those layoffs were offset by new hiring elsewhere in the economy, but on a net basis, payroll levels declined by 2.3 million during this period.
Gail Fosler, chief economist for the Conference Board, an association representing global companies, argued that outsourcing is being blown out of proportion in headlines and political debates. While some jobs are being shipped abroad, she noted, others are coming back home or are being created in the U.S. by foreign companies.
The slow job growth has persuaded the economists that the Federal Reserve will try to encourage business investment and hiring by waiting longer before raising its target for short-term interest rates from the current 1%, a 45-year low.
In the latest survey, 50% of the economists think the first rise in the Fed's target rate will come after August. A month ago, only 29% of the economists responding to the survey thought the Fed would hold off that long. On average, the economists think the target rate will stand at 1.5% in December, down from the 1.7% average forecast in February's survey.
In another report on the economy, the government Thursday said prices of imported goods grew much more slowly in February than they did the month before. Overall import prices rose 0.4% in February after a 1.5% gain in January. The slowdown reflected smaller increases in prices of both petroleum and non- petroleum products. Export prices rose for a sixth consecutive month, up 0.6%.