The US economy's Sept. 11 wounds are healing but analysts say the country is still in a recession that will linger until at least early next year.
More than two months after the attacks on the World Trade Center and the Pentagon, consumers have resumed many of their normal habits, hitting malls and car showrooms and eating at their favorite restaurants.
PHOTO: AP
But economists say that even as Americans start to feel a little safer and happier amid progress in the war in Afghanistan, they will still handle their money a bit more carefully. That restraint is expected to last throughout the holiday season and into the first part of next year.
"This Christmas is going to be tough, even with all the sales that are going on," said Mark Zandi, chief economist at Economy.com in West Chester, Pennsylvania.
It was the initial trauma of the attacks that kept consumers holed up at home in front of their television sets, but their reticence about spending now stems from a different source: fear that they could lose their jobs.
"The trend on consumer spending is probably still a downward one," Bruce Steinberg, chief economist at Merrill Lynch in New York, said. "The key to what the consumer does is still the job market and companies are continuing to lay people off."
Layoff announcements flooded in during the first few weeks after Sept. 11. They have slowed to a trickle lately but Steinberg said with corporate profits likely to plumb post-World War Two lows in the fourth quarter, the job cuts are far from over.
Equally damaging to hopes for a buoyant holiday season is the fact that few companies are hiring. Many economists expect the US unemployment rate -- which jumped a half-point to 5.4 percent in October -- to reach 6 percent in coming months.
Still, analysts are heartened that the economy is proving more resilient than expected.
"Things aren't good but they clearly aren't terrible," said Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania.
Naroff said a turning point in his view of the economy came when he drove by the local McDonald's and saw that the restaurant had put back up its "Now Hiring" sign.
"Those signs had disappeared for a while," he said.
Wall Street is finding reasons to be encouraged as well, most notably last week's report from the Commerce Department showing a 7.1 percent snapback in October retail sales after they sank 2.2 percent in September.
The October jump was the biggest on record but economists cautioned it was fueled by auto sales, which were in turn juiced up by huge incentive offers from car companies.
Because the incentives lured in customers who might have planned to wait to buy a car sometime next year, the surge bodes for weaker sales in coming months.
Steinberg of Merrill Lynch said investors should be careful not to pin hopes of an imminent recovery on the retail sales data or some better-than-expected jobless claims reports that have come out lately.
"We are not ready to recover tomorrow," Steinberg said.
"It's not going to be the worst recession we ever had but it's not over yet."
Ironically, the optimism that the US economy may be poised to pull out of a recession has come before the downturn has even met the loose definition of a recession -- two straight quarters of falling gross domestic product.
A committee that determines the official dates of recessions in the US was holding a conference call yesterday to decide whether the world's largest economy has slid into one, Martin Feldstein, the president of the National Bureau of Economic Research, said.
But the NBER, the nation's official arbiter of recessions, may not determine a date and even if it does, the official announcement will not come until next week at the earliest.
GDP fell 0.4 percent in the third quarter, the first drop in eight years. Most economists feel certain it will log another contraction in the current fourth quarter. But that data won't become available until late January.
"We'll probably get a good-sized negative number for fourth quarter GDP, down 2 percent or so," Zandi of Economy.com, said.
"We'll probably get another negative number in the first quarter."
But Zandi and other economists were breathing sighs of relief that the doomsday scenarios circulating just a few weeks ago have failed to materialize.
"The worst-case scenarios look like they are starting to fall away," James Glassman, economist at JP Morgan in New York, said.
"The world is not looking great but it's not as dire as it looked at the end of the week of Sept. 11."
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS