After nine years of robust growth, America’s economic bubble burst in 2000. Technology shares plunged in the spring, foretelling a sharp economic slowdown later that year. The Fed, led by Alan Greenspan, slashed interest rates. But the economy failed to pick up and was in recession before the devastating terrorist attacks of September 11th. Its health took another knock in December when Enron”s collapse shook investor confidence.

Yet once again America”s economy defied the pessimists. On the back of strong productivity growth, resilient consumer spending and an upswing in corporate profits, it surged in the first three months of 2002. George Bush”s $42 billion economic-stimulus bill seemingly came too late.

But by the summer of 2002 the recovery seemed to be sputtering. A rash of corporate scandals undermined already weak investor confidence and sent equity markets into turmoil in July. George Bush””s projected $5.6 trillion budget surplus over ten years had almost disappeared. America seemed set for a “double-dip” recession or the onset of deflation, but by December commentators were seeing signs of resilience, though not a strong recovery. To reinvigorate the creaking economy, George Bush reshuffled his economic-policy team and is lobbying for tax cuts worth $670 billion.

Last week

The Dow Jones Industrial Average rose by 3.0%, as investors hoped that President Bush”s proposed tax cuts would spur both equity-buying and the American economy. Markets also cheered a jump in the ISM”S manufacturing index, from 49.2 in November to 54.7 in December. (ISM readings above 50 signal expansion, those below contraction.)

The price of gold hit a six-year high of $356 an ounce, as worries about a looming war in Iraq encouraged investors to seek a safe haven. Oil prices eased on expectations that OPEC will increase production by as much as 1.5m barrels a day to cover the shortfall caused by the strike in Venezuela. The price of West Texas Intermediate slipped to $30.35, from a recent high of $33.65.

Next week

This is a big week in economic news.  Tuesday we get the retail sales numbers and the import and export prices.  Wednesday we get the producers price index (PPI) and Thursday the all important inflation measure of the consumer price index (CPI).  We also get the initial jobless claims and the fed’s beige book on Thursday.  Friday is the trade balance and industrial production.  Lots of great stuff next week.  As you hear of these releases try to gage the market opinion of the information and if it makes a difference.  Some numbers will and some won’t.  The beige book will certainly be interesting reading.