While there is no disputing the deep trauma felt by Americans as they watched the destruction and despair of two late-summer hurricanes, the next chapter is unfolding quickly.
The happiest outcome would be that, instead of entering a tailspin, the economy could soon pick up momentum as rebuilding takes hold. And staggeringly high prices for gasoline could begin to slip, as refineries come back on line.
For now, however, one thing is certain. The storms have taken a toll on the nation’s job market, at least temporarily. A measure of the situation occurs Friday.
Chicago economist Robert Dederick is looking for the September employment report to show joblessness inching higher, to 5 percent, from 4.9 percent a month earlier. He believes payrolls sank by about 200,000 positions, reversing a gain of 169,000 jobs in August. All the loss, and more, can be blamed on the Gulf Coast storms.
“Economists are groping in the statistical dark to weigh the full effects of the hurricanes,” said Dederick, of RGD Economics.
The blow to the job market comes at a bad time, he said, because people will soon start paying much higher bills for home heating, as natural gas prices hit new records. That’s a threat to holiday spending and hiring by retailers.
“Before the hurricanes hit, the economy was moving forward at a sustained clip and appeared unscathed by rising energy costs. It had Big Mo,” Dederick said. “As for what happens next, we are waiting to examine the secondary effects from the hurricanes. A clearer picture will emerge, but not for the next month or so.”
Detroit’s effort to move big iron out of showrooms in the face of soaring gasoline prices gets another test today, with reports on September car and light truck sales. Forecasters say the results will be disappointing.
Carmakers enjoyed a banner summer, as General Motors Corp. introduced employee discounts for everyone. The automaker’s program proved so popular that the company extended it several times. GM’s U.S. sales shot up 41 percent in June and 19 percent in July. Other carmakers joined in the act. Now, however, just about all the discounts are history.
The bottom line is that Detroit may face an uphill struggle to push autumn sales out of the slow lane.
The stock market ended what is normally the year’s most challenging month on a high note, finishing with September gains of nearly 1 percent. For the third quarter, the advance was roughly 3 percent. However, for the year, stocks are underwater to the tune of 2 percent.
Optimists are licking their chops over prospects that the rest of 2005 will witness an end-of-the-year rally. That’s what happened last year, when stocks moved higher by nearly 9 percent from October through December.
The next hurdle for Wall Street: third-quarter corporate profits, which begin rolling out this week.
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(c) 2005, Chicago Tribune.
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AP-NY-09-30-05 1914EDT
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