By Evelina M. Tainer, Chief Economist, Econoday
April 26, 2002

Real GDP surged in the first quarter surpassing the optimistic market consensus. Existing home sales dipped from the abnormally strong pace registered in January but still posted healthy quarterly gains. Durable goods orders were somewhat weaker than expected but generally moving in the right direction. The employment cost index showed that compensation costs were moderating. On the whole, the economic reports could justly be viewed in a favorable light. Yet, equity investors listened instead for hints of one or two or even a handful of poor earnings reports. This is a sharp contrast to the booming '90s, a period of irrational exuberance when earnings and economics couldn't slow an advancing stock market. Now it seems that we are seeing the flip side of the coin. A recovering economy doesn't seem to be enough to get equity prices out of their slump.