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COPYRIGHT 2006 Voxant, Inc.
Original Source: NIGHTLY BUSINESS REPORT
PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: A better than expected snapshot of the economy and an encouraging view from the Fed spur investors to bid up stocks. The Dow gains 90 points and the NASDAQ closes up 19.
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: A brand new Vista for Microsoft. Tomorrow, the software giant rolls out its biggest software release in years: a new operating system and a new suite of office programs. Tonight, a preview of what to expect.
KANGAS: There`s a growing tide of new approaches to alternative energy. We look at how tidal power itself could power up part of New York City, as our special series "Power Struggle" continues.
GHARIB: And speaking of alternative energy, our street critique guest looks at investment opportunities in just that area. She`s Hilary Kramer, personal finance editor at aol.com.
KANGAS: I`m Paul Kangas.
GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Wednesday, November 29.
Good evening everyone. Stocks on Wall Street rallied today on encouraging reports on the economy. The Dow jumped 90 points and the NASDAQ rose 16. Most of the buying followed the afternoon release of the Federal Reserve`s beige book, which showed moderate economic growth in most regions of the country. Investors also applauded news this morning that the nation`s gross domestic product grew 2.2 percent in the third quarter, well ahead of the earlier estimate of 1.6 percent. But new home sales fell 3.2 percent in October, the biggest drop in three months. However the median price of those homes rebounded, up almost 2 percent to more than $248,000. Joining us now with more analysis on those economic numbers, Stuart Hoffman, chief economist at PNC Financial Services Group. Hi, Stuart.
STUART HOFFMAN, CHIEF ECONOMIST, PNC FINANCIAL SERVICES GROUP: Hi, Susie.
GHARIB: As you look at all of these economic numbers, what do they tell you about the economy? What kind of shape is it in?
HOFFMAN: These numbers smack of the so-called soft landing. Clearly growth has slowed down. It`s not growing at 3 or 3.5 percent as it was the last couple of years. Housing is certainly a drag and probably hasn`t hit the ground floor yet, but the overall economy is doing well. The Fed`s beige book from around the country anecdotal grass roots information says consumers were spending, houses were weak, autos were weak, but the rest of the economy, particularly the service sector seems to be doing quite well.
GHARIB: All right. Well, as you said, housing was weak and so far this year new home sales are down 25 percent. We saw today oil prices nudging up. They`re now at $62 a barrel. So what do those factors mean for growth in the fourth quarter?
HOFFMAN: I think economic growth this quarter for real GDP will be about the average of the last two, somewhere around 2.25 to 2.5 percent. That seems to be the kind of slowdown that would define a soft landing. Inflation in those numbers last quarter were a little bit better than they were in the summer. Of course with the huge drop in energy prices even with oil back up to $62, gasoline prices, other commodity prices are down. It means inflation is going to be very good this quarter. So it`s a pretty good picture and certainly music to stroke investors` ears.
GHARIB: As we saw today. Do you think that these numbers fit into the view that Ben Bernanke delivered in his talk yesterday?
HOFFMAN: Yes. I expect the chairman might have had a little heads up on the GDP number being revised up. He described an economy with a risk on inflation is still to the up side. That`s what a Fed chairman and other Fed members are supposed to say and do. But it looks to me as...
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