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KAI RYSSDAL: I’d love to be able to tell you everything is economically hunky-dory. That today’s announcement, gross domestic product’S stronger than it’s been in two and a half years, was the whole truth and nothing but the truth. But I can’t do that. Even with a GDP jump of 4.8%. Wages are lagging behind. washington’s in a logjam. And, Marketplace’s Bob Moon reports, everyone’s got a different read on what the numbers mean.
BOB MOON: It’s an encouraging sign that the economy was in such robust health heading into the trauma of higher energy costs in recent weeks. Standard & Poors chief economist David Wyss says it makes it more likely the economy can absorb the shock:
DAVID WYSS:“I would expect the economy to stand by fairly well as long as energy costs don’t go up too much from where they are now. We’ve proven that we can take three-dollar gasoline. We don’t like it, but we can survive it.”
Wyss says much higher prices, though, could well take a toll on economic growth in the months ahead. Still, President Bush immediately cast today’s news in a positive light, declaring the economy is strong. But others wonder why American workers aren’t seeing the benefits. A separate report from the Labor Department today shows wages and benefits rose only slightly in the first quarter, at the slowest pace in seven years. The Economic Policy Institute’s Josh Bivens says while workers make up 60 percent of the Gross Domestic Product, somehow their compensation isn’t keeping pace:
JOSH BIVENS:“That’s a huge chunk of the economy that just is, sort of, being left behind while growth is being driven by the smaller share of the economy that goes to things like corporate profits and proprietors’ incomes. We still just haven’t managed to tighten up the labor market enough to make workers feel comfortable asking for raises.”
On the other hand, S&P’s David Wyss was able to see a silver lining in that seemingly gray cloud:
WYSS:“If you look at the slowdown in employment costs, it almost all came from the slowdown in benefit costs – and that’s good. It means that we are seeing some reprieve on the health care costs, particularly, after several years of extremely strong increases.”
Economists also point out consumer spending remained strong in the first quarter, although higher energy costs may yet threaten that economic pillar.
In New York, I’m Bob Moon for Marketplace.