Altes Elliott-Wellen-Forum - U.S. Economy May Suffer as Terrorism Shakes Consumers

U.S. Economy May Suffer as Terrorism Shakes Consumers

verfasst von Sascha, 12.09.2001, 13:26

09/11 17:46

U.S. Economy May Suffer as Terrorism Shakes Consumers (Update2) 

By Vince Golle

Washington, Sept. 11 (Bloomberg) -- Consumer spending may collapse at a time when the economy is teetering on the edge of recession, as the deadliest terrorist attack on U.S. soil shakes Americans' confidence and threatens business, analysts said.

"The chances of a real recession are many times higher than they were yesterday," said Roger Kubarych, chief U.S. economist for HVP Group in New York."Yesterday, I would have said that the probability is very slight. Now, I would say that the probability is 50-50."

Own comment: And i said ist is 95-5

In a series of attacks, hijacked airplanes destroyed the World Trade Center in New York and crashed into the Pentagon in Washington. The death toll is likely to exceed that of the 1941 surprise attack on Pearl Harbor that killed 2,400 people.

"People's minds aren't on shopping," said Debbie Koopman, vice president of corporate and investor relations at Spiegel Inc. in Downers Grove, Illinois, whose stores include Eddie Bauer.

The economy expanded at a 0.2 percent annual rate from April through June, the weakest quarter in eight years. With consumer spending accounting for two-thirds of gross domestic product and consumption keeping the economy afloat, any sustained interruption of business may limit a rebound, analysts said.

Walt Disney Co. closed its theme parks. All air flights were grounded. Retail outlets such as Mall of America in Bloomington, Minnesota, shut their doors. Mall of America has more than 500 stores, employs more than 12,000 people, and attracts as many as 42 million visits annually, the mall's Web site says.

Stores Closed

"We have closed stores throughout the country, as appropriate, in major markets such as New York, Boston, Chicago and San Francisco," said Margery Myers, spokeswoman for Talbots Inc., a Hingham, Massachusetts-based retailer of clothing for women and children. The company has 768 stores.

Even Major League Baseball canceled its games tonight. That may be just the beginning.

"At least for a couple of more days a substantial amount of economic activity will remain paralyzed," said Thomas Carpenter, chief economist at ASB Capital Management. ``It's clear that when you send everybody in the country home and you freeze all the airplanes, airlines will remain grounded for days, that will interrupt normal work activity. That will have a temporary but real negative effect on economic activity."

Robert Atkinson, director of investor relations at Too Inc., a clothing retailer in Columbus, Ohio, said he expects a slowdown in the movement of goods.

Freight Shipments

"We use air freight to ship most merchandise from our distribution center in Columbus to various stores around the country," he said. The terrorist attack"will have some short-term impact but given the tragedy of today's events, it pales in comparison."

A measure of consumer confidence from the Conference Board fell to its lowest level in more than eight years after the start of the Persian Gulf War in January 1991. Confidence is regarded as an indicator of consumption. Personal spending during that same month fell 0.4 percent.

Loss of consumer optimism"spells a lot of trouble for the U.S. economy," said David Littman, senior economist at Comerica Bank, in Detroit.

The economy has already had its weakest 12 months of growth since the 1990-91 recession. Federal Reserve policy makers have reduced interest rates seven times this year to prevent the slowdown from becoming worse.

Looking for Rebound

Before today, central bankers were saying weakness would persist for a while."The common view is the revival will be a little later and somewhat slower than people thought three or four months ago," William Poole, president of the Fed Bank of St. Louis, said yesterday in New York.

Economists have been forecasting an eventual rebound. The Blue Chip Economic Indicators consensus forecast released in August showed the economy would probably expand at a 1.7 percent rate in the current third quarter and a 2.8 percent pace in the final three months of the year.

Economists say the third quarter will be much weaker after today's events. The economy in the current quarter"will probably show no growth to a contraction," Littman said.

Stocks will likely decline."Whenever you've had these things before, you've had big drops," Kubarych said."This will put a lot of pressure on the Fed to lower rates."

October 1987

Following the October 19, 1987, stock market crash, the Fed provided cash to banks and securities firms to keep financial markets functioning."The Fed is the lender of last resort," Fed Governor Edward Gramlich said today in Tucson after the attacks. "If credit is needed to make transactions go, the Fed will provide it." Gramlich said he was making that statement"in the spirit" of a similar statement from Fed Chairman Alan Greenspan in 1987.

With U.S. stock markets closed, trading was concentrated in Europe today, where shares slumped. The U.K.'s FT-SE 100 Index plummeted 5.7 percent and France's CAC 40 lost 7.4 percent, the biggest declines since the market crash of October 1987.

Over the longer term, the economy may benefit from rebuilding efforts and as consumers slowly regain confidence.

While there may be adverse effects from today's attacks,"what the government does may go in the other direction," said Robert Mundell, professor of economics at Columbia University and 1999 winner of the Nobel Memorial Prize in Economic Science.

"You're going to have a new building, and there may be a step up in military" spending, Mundell said.

Government statistics show that spending rose 0.6 percent in February 1991 and 1.1 percent in the following month after the U.S. and its allies brought a quick end to the Gulf War. The Conference Board's consumer confidence index, which fell to 55.1 in January 1991, surged two months later to 81.1.

[b] Quelle: http://www.bloomberg.com

<center>

<HR>

</center>

Thread gesperrt

gesamter Thread:

U.S. Economy May Suffer as Terrorism Shakes Consumers - Sascha, 12.09.2001, 13:26