Monday Economic Outlook: The Good, The Bad, and the Okay

Today Bloomberg News reported that retail sales in the U.S. rose in March by the most in three months, enabling the economy to expand in the face of downturns in manufacturing and housing. The International Herald Tribune also reported on a talk that Alan Greenspan, the former U.S. Federal Reserve Board chairman, gave in Tokyo today via satellite from Washington. Greenspan said economic growth outside the United States was creating demand for services from companies like Microsoft. Even Reuters reported that this weekend at a meeting with the IMF, U.S. Treasury Secretary Henry Paulson said that the U.S. economic prospects were good for this year. He said:

"We are committed to keeping the U.S. economy open to trade and investment, which underpins our economic strength, and to opposing protectionism whenever and wherever it arises. . .While economic activity slowed below potential in late 2006, we expect GDP growth to rebound to 3 percent by the end of this year."

However, Modern Plastics Worldwide published an article on Friday that warned of a slowdown in 2007 for the economy at large, with manufacturing expected to grow as little as 3%. Economist Bob Shrouds cited a "lagged impacts" of high oil and gas prices, rising interest rates, an income slowdown, and a tepid housing market, among other indicators. Tony Deligio writes:

In manufacturing in general, and plastics specifically, Shrouds sees industry lagging behind the economy at large, dipping from 4.7% in real terms in 2006, to 1.5% in 2007, after climbing from 3.9% in 2005. For China, manufacturing is growing at 16%-17% annually. After growing at a strong rate of 5% in 2006, the U.S. production of plastic products fell to 1% in 2006, but is expected to rebound somewhat in 2007 to 2.3%.

The Iranian Press TV also reported that a Swedish Economist had predicted imbalances in the U.S. economy will result in a bust this year. I believe "recession" was the word he used.

Since it is Monday, though, I'll leave you off with some positive economic predictions. Smart Money's article says that financial officials from the Group of Seven maintained an upbeat view of the global economy. "Although risks remain, the global economy is having its strongest sustained expansion in more than 30 years and is becoming more balanced," the ministers said.