Monday, November 3, 2008

The Stock Market Faces Another Day of Bad News

Monday AM: The Bad News

  • With a headline, FACTORIES ROCKED IN OCTOBER: ISM MANUFACTURING GAUGE YIELDS MOST ABYSMAL READINGS IN DECADES, MarketWatch reported that the nation's manufacturers continued to cut back production sharply in October for the second straight month.  The Institute for Supply Management reported Monday that its index fell to 38.9% in October from 43.5% in September -- the lowest level since September 1982. The size of the decline was far greater than expected: the consensus forecast was a decline from 43.5% to 41.5%.  Instead the decline was more than twice as much -- over 12%.  Scores below 50% on the ISM index suggest economic contraction. All regions reported a decline and nationally both new orders and production fell to their lowest level since the early 1980s. The October decline of 4.6 points follows a September plunge of 6.4 points.  Overall, the ISM index has dropped 11 points from a stagnant economy in August at 49.9% to a serious recession in October. Full story

  • Circuit City Stores Inc., the second largest consumer electronics chain in the United States said it will immediately close and liquidate 155 stores and lay off thousands of employees as it struggles to survive an increasingly dreary holiday shopping season. Citing a deteriorating economy, tightening credit limits by its suppliers, and an updated assessment that found its inventory was worth less than it expected, Circuit City plans to reduce its domestic work force by 17%.
  • More retail losses are expected since October consumer confidence hit an all-time low and consumer spending during the 3d quarter declined at the fastest rate in 28 years.  Claims for unemployment exceed 500,000 and almost 42% of consumers expect fewer jobs in coming months. When unemployment rates are reported this Friday, another 200,000 additional jobs are expected to be lost, which would increase the unemployment rate from 6.1% to 6.3%, the highest since June 2003. In September, the United States economy lost 159,000 jobs, bringing the losses in the first nine months of the year to 760,000.

We are certainly not out of the woods yet -- indeed, before January 20th, we are apt to wander far deeper into the darkness.  Good luck to all of us, especially Barack Obama.

Economics | Permalink

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