Wall Street and the mass media have a habit of only highlighting the positive when it comes to economic news. We dig deeper past the sugary coating.

Take, for instance, the latest gross domestic product (GDP) report. Washington claims the economy grew at a 2.4% annual rate in the second quarter. That's still pretty lousy when you consider that the economy must grow at a rate of over 3% in order to create jobs. But it's even worse when you look at the details.

Defense spending contributed more than three-quarters of the 2.4% growth rate. Without defense spending, the economy barely grew at all.

Consumer spending on durable goods was up slightly but it was clearly because of bargain shopping. Zero-percent financing, no-money-down offers, and fire sales have allowed businesses to clear out some inventory, but that doesn't do much to boost profits nor does it mean that consumers are willing to spend on anything but deeply-discounted merchandise. And as consumers snap up these deals, they're debt levels are climbing higher and higher. This is a recipe for disaster, not a recipe for recovery.

For more evidence that Wall Street and the mass media gloss over the bad stuff, just take a look at some of the latest earnings reports. Here's the rest of the story ...

General Motors: Profits at the biggest automaker in the world fell 30% in the second quarter versus the year-ago period. In the meantime, profits at the company's massive North American auto operations plummeted 94% as price wars tore into profits.

Dow Jones: Earnings at the Wall Street publishing beacon plunged 43% in the second quarter as advertising revenues from the company's flagship Wall Street Journal tumbled.

Maytag: The commercial and home appliance giant's second quarter net income sank 63% -- to just $25 million from $68 million in the year-ago period. The culprit: Lousy market conditions and a dismal performance by the company's floor-care products division.

Boeing: The world's largest aerospace company swung to a loss of 24 cents a share in the second quarter (from a profit of 94 cents a share a year earlier) and lowered its earnings outlook for 2003 AND 2004! That's not all: The airplane making behemoth plans to shed another 4,000 to 5,000 jobs by the end of the year ... and that's on top of the approximate 34,735 jobs it cut so far.

Bottom line: Things aren't as rosy as Wall Street says at many of the nation's largest companies.

Take a look at some of the other developments in the economy and the markets ...

* The housing market is sinking fast. Refinance applications plunged an astounding 32.9% for the week ending July 25. Mortgage rates are rising and it's knocking the wind out of the housing industry.

http://www.safemoneyreport.com/home/daily.asp?archive=073003

* Consumer confidence is fading. The Conference Board's consumer confidence index for July fell to its lowest level in 4 months. The war is over, the economy is supposedly rebounding, and stocks are supposedly in a new bull market. So why are consumers so pessimistic?

* MORE bankruptcies. Mirant Corporation recently became the 11th largest company to file for bankruptcy protection in US history. And we suspect that there are hundreds of other companies still on the verge.

For all of these stories, visit:

http://www.safemoneyreport.com

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