Headline: Number Crunching: Attacks Leave Economists Scrambling for Read on Economy

Source: ABC News, 1 October 2001

URL: http://abcnews.go.com/sections/business/DailyNews/WTC_economyoutlook011001.html

As America slowly gets back to some sense of normalcy in the aftermath of this month's tragic attacks, at least one group of individuals is having an extraordinarily tough time getting focused: economists.

Already wildly varied in their forecasts for the economy's outlook before Sept. 11, many if not all are now grappling with the fact that most of the statistics and indicators they know and count on — their economic tea leaves, so to speak — won't be settled for quite some time.

That's left them looking a lot more closely at other numbers that are not traditionally part of the economic repertoire, and a lot of anecdotal evidence they otherwise wouldn't have paid much attention to. It's also left them scouring shopping malls, restaurants and other places for any bits of economic evidence they can get.

"I drove to the mall to count cars in the parking lot," said Kim Rupert, a senior economic analyst with Standard & Poor's MMS in San Francisco. "The stats we've been counting on to provide clues about the direction of the economy are now pretty much useless, so we've been looking at some unusual types of indicators and doing more of an anecdotal kind of analysis."

‘Without a Compass’

Indeed, economists admit it will take at least a few months to establish with any kind of reasonable certainty the new direction for the economy. While the initial economic aftermath of the attacks was obvious — no travel, no spending, no manufacturing, no trade — the farther-reaching affects of the World Trade Center and Pentagon tragedies on the economy won't be known for some time.

So what exactly are the pros looking at?

"Anything we can get our hands on," said Richard Berner, a senior economist with Morgan Stanley Dean Witter in New York. "Different indicators offer different insights and demand different degrees of attention, depending on what the economy is doing. But this is like no other time that we've been through."

While it's almost always been a hobby for many economists and market-watchers to observe the mall action, check out the table-wait times at restaurants or count the number of people in the movie line, Berner and others have been looking at secondary numbers previously given little serious consideration for clues about the economy.

These indicators include:

Retail Figures: Secondary figures such as the Bank of Tokyo-Mitsubishi and UBS Warburg's weekly chain-store sales report have become more scrutinized than ever in the wake of the attacks.

Chain-store sales declined 0.8 percent for the week ended Sept. 22, following a 1.4 percent decline from the previous week, according to the most recent report released Tuesday. Sales plummeted immediately after the attacks as malls and stores closed in response to the tragedy, with customer traffic dropping about 65 percent.

Auto Sales: Other private firms such as JD Power and Associates, an automotive research firm, are also providing numbers that are helping economists assess the resolve of consumers. According to their figures, auto sales at dealerships across the country plunged in the wake of the attacks, falling almost 30 percent by Wednesday, Sept. 19. Through Wednesday of this week, sales were still down about 10 percent.

"A lot of the expectational numbers are just hard to interpret what they really mean and how they will impact the economy," said Bob Schnorbus, chief economist at JD Power, which tracks sales from more than 5,000 dealers. "Auto sales are a good indicator of how consumers are responding."

Schnorbus and his colleagues took the unusual step of tracking daily sales volumes immediately following the attacks.

Consumer Confidence: Numbers such as the University of Michigan's monthly survey of consumer sentiment — traditonally not a market-moving report — are being anxiously awaited by economists and market-watchers alike.

The lastest set of numbers, released Friday, show sentiment slid in September to 81.8 from 91.5 in August, an eight-year low. And that was revised downward from an earlier estimate of 83.6.

Government Reports: Previously underrated government reports such as weekly initial jobless claims, the help-wanted index, factory orders and inventories, import and export prices and even state claim benefits will all be nontraditional numbers that economists pore over to get a better handle on where the economy is going.

"We aren't even going to see the fourth-quarter [gross domestic product] numbers until next year," said MMS's Rupert. "Unfortunately it will be kind of like trying to bake a cake with only a few ingredients and no measuring cup. We're expecting it to take a while until some of the numbers reflect real economic activity, and not activity distorted by the attack."

Starting From Scratch

Just how long will it take to sort out? Economists agree that while September figures measuring things such as employment, productivity, manufacturing output, consumer sentiment, retail spending and others are now basically moot, figures that will be released in October and early November will help them get a better handle on the economy's performance.

Until then, however, it will be a bit of a guessing game.

"Would I really have scrutinized a report on weekly chain-store sales or daily numbers on showroom auto sales before Sept. 11? Definitely not," said Doug Porter, a senior economist with brokerage BMO Nesbitt Burns. "But I am now. It's really all we have to go on for the moment."

-- Andre Weltman (aweltman@state.pa.us), October 01, 2001

Answers

They need to come read the postings on this Board! ROFLMAO!

-- Andre Weltman (aweltman@state.pa.us), October 01, 2001.

When I was doing the Economic Thing for a recently merged NYC bank, NO ONE, except me, looked at the Help Wanted numbers...big mistake.

They consist of 53 time series that are "averaged" to come up with a "Number". FAR more interesting are the individual series. In fact, If I had to rely on only ONE Series, it would be Help Wanted...it points to current activity AND tells which part of the country is HOT, and which part is NOT.

That these clowns could ignore it all these years is the reason we are so confused today.

-- Lael (Lael@they_have_been.net), October 01, 2001.