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Economists Detect Signs Of Long-Awaited Slowdown

THE WASHINGTON POST

The long-awaited cooling of the red-hot U.S. economy may have finally begun, according to a number of economists poring over an array of recent soft economic figures.

“I sense clear signs of the beginning of the desired slowdown,” said Mickey Levy, chief economist at Bank of America in New York. “In particular, we’ve had two months in a row of flat retail sales,” and a combination of falling auto sales and weak chain store sales “means a weak retail sales number for May as well.”

Many economists, investors and policymakers are welcoming such signs because a more modest rate of economic growth would ease inflation fears and limit interest rate increases by the Federal Reserve in coming months. The bond and stock markets have rallied in recent days as the numbers have prompted a shift in expectations.

Among the signs: Sales of domestically produced new cars and light trucks, which include sport utility vehicles, are still relatively strong, but they’ve been declining since they peaked in February at an annual rate of 16 million vehicles. They fell in March to a 14.9 million rate, to 14.8 million in April and to about a 14.5 million rate last month, according to preliminary May numbers that became available Thursday.

Consumer spending for new vehicles and a host of other products and services has been a driving force in the now nine-year-old U.S. economic expansion, the longest in American history. In the first three months of this year, consumers increased their purchases at an inflation-adjusted annual rate of 7.5 percent, but so far it looks as if the figure for the current quarter will be only about half that large, analysts said.

Chinese Computers Amazed N. Korean Leader

THE WASHINGTON POST -- BEIJING

North Korea’s leader Kim Jong Il, on his first foreign trip since taking power in the world’s most isolated country six years ago, was amazed by computers, hugged repeatedly by his Chinese hosts and revealed that he had stopped drinking and smoking, China’s state-run press said Thursday.

The secluded leader, who sported a bouffant hairdo and a slightly ill-fitting gray Mao suit, left China Tuesday after a two-day trip made in secrecy. In reports issued Wednesday, Chinese media said Kim, 58, and senior Chinese leaders “reached consensus on major issues of common concern in an intimate and friendly atmosphere.”

Foreign Ministry spokesman Zhang Qiyue, briefing reporters on the visit, said Kim hailed China’s capitalist-style reforms but said Pyongyang is “building Korean-style socialism according to its own situation.”

Chinese government sources said the news blackout, in place since Kim arrived in Beijing by train on Monday, had been imposed as a security precaution at the request of North Korea.

The trip, made just two weeks before Kim is supposed to meet his South Korean counterpart, Kim Dae-jung, in a historic summit in Pyongyang, provided the first glimpse of a man who runs one of the world’s last hard-line Communist states.