WEISS COMMENTS
Economic Paralysis Sets In
-- November 1, 2001
The stock markets rallied today, despite the announcements that consumer spending plunged at its fastest rate in 15 years and manufacturing recorded its 15th month of contraction. Does this mean that a bottom has been hit, and recovery is in sight? No way! Today's economic data confirmed that things have gotten worse, not better. And that things can still get even worse.
Let's look at the facts: Consumer spending dropped 1.8% … manufacturing activity fell to 39.8, it's worst showing since January 1991 … construction spending fell 0.4% … GDP fell 0.4% … September new home sales fell 1.3% from August (the Northeast saw a whopping 26.5% drop in sales) … existing home sales fell 11.7% … durable goods orders fell a huge 8.5%. And that's only the economic data released in the past WEEK! There wasn't one piece of economic data that improved last month.
Plus, company earnings certainly aren't improving. According to Thomson Financial, third-quarter earnings for companies in the S&P; 500 fell an estimated 22%. And, its forecast for the fourth quarter is that earnings will fall ANOTHER 22%. That doesn't sound like a rebound to us. Wall Street's judgment is so clouded they believe that a settlement in the government's lawsuit against Microsoft is going to cure all of the ills infecting the economy.
Don't get dragged in by this hype. There haven't been any concrete signs of a turnaround. And chances are very good that the bottom is still much further below.
related article:
Consumer Spending Plunges 1.8 Pct.
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