While the national high tech boom has turned to bust and other traditional sectors – such as manufacturing -continue to suffer, the Federal Reserve has buoyed the economy with lower interest rates.
The idea behind such cuts is to buy time – and infuse the economy with working capital. Just maybe, it’s working.
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Perhaps we are seeing a silver lining in what has certainly been a sluggish and clouded economy.
A report by the U.S. Labor Department last week showed that the prices American consumers paid for goods and services fell sharply in July – including gasoline prices. Economists across the country see the report as providing some evidence that inflation is in fact under control.
The Consumer Price Index dipped 0.3 percent – the first decline since April 2000 and the largest decline in more than 15 years. Economists had expected it to decline by just 0.1 percent.
The report also pointed out that the nation’s housing market is in fact strong – as it is here in Rhode Island – and that transportation costs had come down significantly. These are good signs and they suggest that the second half of 2001 may in fact be a better one than the first.
Whether these positive signs nationally will translate into tangible signs of an improved economic climate here remains to be seen. Traditionally, Rhode Island has been slow around the curve.
The latest Consumer Conditions Index by University of Rhode Island Economics Professor Leonard Lardaro shows some positive signs as well. Lardaro reported that interest rate cuts, IRS checks, and the growing home equity is providing many Rhode Islanders with an enhanced ability to sustain consumption spending.
The CCI measures the strength of the present economic climate in Rhode Island by following the behavior of 12 indicators, including employment, retail sales, housing sales, wages and labor.
Only time will tell. Still, these are positive signs – signs that should have businesses thinking positive.
