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Recovery Has Stalled
-- October 17, 2002

Wall Street's rally days will soon come to a screeching halt, once investors realize that the fundamentals still haven't gotten any better. In fact, economic fundamentals are getting worse.

The manufacturing sector, which started to rebound slightly at the beginning of the year, is now facing a new slump. Industrial output dropped for the second month in a row in September. And capacity utilization decreased to its lowest level since May -- on average, nearly one-quarter of U.S. factories stand idle.

Unemployment is also on the rise once again. New jobless claims rose by 22,000 to 411,000 this week. Plus, the four-week moving average of jobless claims has remained above 400,000 for seven consecutive weeks. Jobless claims above the 400,000 level typically indicate that the job market has stalled. Rising unemployment means that consumers have even more pressure on them to rein in their spending.

Clearly, the economy has a long way to go before it can even find the on-ramp to the road to recovery.

related article: Industrial Output Falls In September