The papers all lead with the results of a government report yesterday that the U.S. economy grew roughly 2 percent in the first quarter of the year. The New York Times headline calls the growth “STEADFAST ALTHOUGH MODEST”; the Washington Post header avoids adjectival commitment: “ECONOMY BEATS EXPECTATIONS”; while the Los Angeles Times names an agent: “CONSUMERS HELP GIVE SURPRISE JOLT TO U.S. ECONOMY.” The WP asserts that the pace of growth is “about twice as fast” as most forecasters had predicted, and quotes an economist who calls these “great numbers.” The NYT’s economic pundit is more circumspect, saying that the report “belies the idea that we’re in a recession, but it doesn’t mean that we’re out of the woods yet.” And the LAT reminds us of the economy’s 5.2 percent annual growth rate just a year ago, noting higher up than anyone else (third graf) that the economy is “still vulnerable.” In response to the report, the Dow Jones closed up over 100 points and the Nasdaq rose nearly 40 points.
The papers all point out that while consumer spending (especially for durable goods like new homes, cars, and appliances) rose 3.1 percent in the first quarter, and government spending rose 4 percent, business investment fell 11.5 percent, with companies curtailing expansion plans and shrinking inventory. The papers agree that these production cuts are essential for more rapid growth later this year. But the NYT warns that decreased business spending amidst increased consumer spending is atypical and potentially troubling: normally, when the U.S. economy slows (as in the start of the last three recessions), the consumers rein in their spending before businesses do.
Everybody notes that the consumer spending increases occurred alongside recession rumors and a falling stock market, but nobody speculates on why consumers kept on buying. Was this consumer denial? A little pre-recession hoarding? And while consumers bought more last quarter, the savings rate of American households dropped, causing economists to speculate that spending may drop later in the year as consumers start paying off debt. This speculation finds some confirmation in the University of Michigan’s index of consumer sentiment, cited by both the LAT and the WP, which is down five points from March, and nearly 20 points below its high a year ago. In light of these more uncertain signs, the papers agree that the Fed will probably still drop interest rates by at least a quarter-point when it meets next month.
A WP front-pager details a change of heart among Senate Democrats unhappy with President Bush’s denunciation of the 1997 Kyoto global warming accord last month for its potential to threaten U.S. economic prosperity. While the Bush administration has yet to detail an alternative plan, it is considering industry proposals for a voluntary, incentive-based approach and an emphasis on new technologies as a way around the deadlines and strict emission guidelines of the Kyoto accord. Senate Minority Leader Tom Daschle said he “would not be averse” to Bush’s proposal to switch from mandatory to voluntary compliance with emission standards, provided there would be an incentive program for countries to change their industries’ current practices. The WP calls the Demos’ change of tack “the first indication of an evolving bipartisan policy on one of the most contentious foreign policy issues Bush has confronted in the first months of his presidency.”
An NYT front reports on the angry protests yesterday on the island of Vieques, Puerto Rico, where hundreds of Puerto Ricans demanded that the U.S. Navy stop the bombing exercises it has practiced on a local Naval camp since 1941. Many Puerto Ricans claim that contamination from spent shells has caused unusually high rates of cancer on the island (home to 9,400 people) as well as a rare heart condition linked to high noise levels. The protests led to the arrests of 65 demonstrators, who breached a fence and moved into restricted Navy land in an attempt to dissuade the Navy from resuming the shelling. Naval officials have long maintained that the site–alone on the Atlantic coast in accommodating joint training in aerial, amphibious, and ship bombardment–is a crucial for the preparation of sailors and Marines. (Question: is the site unique in this respect due to geography, or climate, or because the local efforts to stop the bombing exercises over the years have failed?) The site’s future will be determined by a local referendum Nov. 6.
The NYT goes above the fold with a special report on heightened efforts by law and drug enforcement officials to combat the popularity of club drugs like Ecstasy by imposing criminal penalties on the owners of the clubs who can be proved to have knowledge of illegal drug use in their establishments. The test case for such efforts is pending in New Orleans, where the U.S. attorney is prosecuting two club owners under the 1986 federal Crack House Statute, used “against those who maintain a property where they know drugs are sold and used.” The New Orleans case has also attracted the attention of the American Civil Liberties Union, which asserts that the defendants in the case are being targeted for the sort of music they provide, speech protected under the First Amendment.
Both the LAT and the WP front the latest in U.S.-Russia squabble over American millionaire Dennis Tito’s attempt to become the world’s first paying visitor (an astronomic $20 million) to space. Tito was scheduled to lift off in a Russian spacecraft Soyuz bound for the International Space Station early this morning. But NASA, which had argued that the rudimentary space station was not yet ready for tourists, requested that Russia delay the trip to give a U.S. space shuttle attached to the ISS time to repair a glitch in the station’s computer command and control system. The issue was resolved when Russia agreed not to dock the Soyuz to the space station until after the U.S. shuttle had departed. While the U.S. was unable to stop Tito from joining the Russian crew, it did get him to promise to pay for anything he might break during his six days on the station.
Dazed and confused: The WP coverage of Tito’s fantastic voyage reefers (and everybody else stuffs) the latest in the bizarre case of American Fulbright scholar John Tobin, who was arrested on drug charges in Russia in early February and later suspected of being an American spy by Russian counterintelligence. Yesterday in a Russian court, Tobin was convicted of possessing and distributing 2 ounces of marijuana and sentenced to 37 months in prison. The case is headed for appeal. Any U.S. ravers who think their passion for trip-hop makes them unfair targets in misguided national drug war might consider that, should his appeals fail, Tobin will spend over three years in a Mordovian penal colony.