Thursday, November 15, 2001

Retail sales smash expectations

Car deals lead increase; analysts weigh recession

The Associated Press

        WASHINGTON — Consumers snapping up zero-interest car deals sent retail sales surging by a record amount in October.

        Most analysts said the 7.1 percent jump did not shake their view that the economy had been pushed into recession by the Sept. 11 attacks, although some said the downturn is likely to be milder than first feared.

        The traditional arbiter of when recessions begin and end indicated that it might date the slump all the way back to March, when employment peaked.

        The Commerce Department report Wednesday said the gain in retail sales was led by a record 26.4 percent surge in auto sales.

        The overall gain was almost triple what economists had been expecting and stood as a sharp contrast to a string of bleak reports after the attacks.

        But most analysts said they thought that the forces dragging the economy down remained so strong that the one-month surge in retail sales would not be enough to lift the economy back into positive territory this quarter.

        The National Association for Business Economics released a new forecast on Wednesday predicting the gross domestic product would decline by 2 percent in the current quarter. The GDP fell at a 0.4 percent rate in the third quarter.

        The NABE's 33 forecasting economists said they thought that the country was in a recession but that it would be mild and brief, ending early next year.

        The National Bureau of Economic Research, the university economists assigned the job of calling recessions, has still not made its call.

        However, members of the NBER panel said Wednesday it was increasingly likely they would rule that a recession had begun, with some suggesting they would date the start back to March.

        “The evidence seems overwhelming right now that we are in a recession. But even though the evidence is awfully strong, it is not 100 percent,” said Harvard's Jeffrey Frankel, one of six economists on the NBER dating panel.

        If the panel does determine that a recession began in March, it would mean that the country's record-long economic expansion ended on its 10th birthday. The last recession began in July 1990 and ended in March 1991.


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