Economic Reports Show Effects Of Terrorist Attack
October 25, 2001
Even though the latest economic reports paint a picture of a dismal economy, there is some evidence that the full shock of the terrorist attacks to the economy was absorbed during September.
Durable goods orders fell 8.5% in September to their lowest level since August 1996, the fourth straight monthly decline. The U.S Commerce Department also reported the consecutive drops are the first since they began recording such activity in 1992. Durable goods shipments also fell for the fourth straight month in September, dropping 5.5% to the lowest level since March 1997, following a 1% decrease the month before.
On the plus side, inventories shrank in September, dropping 1% following a 0.9% decrease in August.
Newport Communications Senior Economist Jim Haughey says this report is better than expected, even though there were significant declines. He says the decline in inventories is evidence that the effect of the attack on the U.S. was absorbed in September with a cut in durable goods production.
“Now we are experiencing a rebound from the worst period in mid-September," he says. “It is likely that October and maybe even November will record shipments gains that are more driven by the rebound than by a sustained recovery in demand.”
Communications equipment orders plunged 39.7 percent last month following a 1.9% decline in August, the biggest drop in nearly five years.
Aircraft orders fell 29 percent, following an 8.6 percent decrease the previous month. Computer and electronics orders dropped 9.1% following a 0.7% increase in August. Orders for motor vehicles and parts fell 15.1% after declining 0.7% in the prior month.
Orders for semiconductors, however, moved up 16% in September following a 20.4% gain the month before.
Through September, durable goods orders were down 12.8% in 2001 compared with the same period a year ago.
Also yesterday there was dismal news on unemployment and existing home sales. The U.S. Labor Department says the four-week moving average for claims increased to 505,000, the highest level in more than 10 years.
The National Association of Realtors reported existing homes sales fell 11.7% in September, which according to published reports is more than analysts were expecting.