- The Washington Times - Wednesday, November 29, 2000


Consumer confidence fell in November to its lowest level in a year, and the nation's factories reported a sharp drop in demand in October further signs of continued slowing in the once surging U.S. economy.

The Commerce Department reported yesterday that orders for big-ticket manufactured goods fell 5.5 percent last month, led by a big decline in orders for airplanes and the biggest plunge in orders for primary metals in almost two years.

Meanwhile, the Conference Board reported in New York that its consumer confidence index slipped to 133.5 in November, its lowest reading since October 1999 and a significant decline from its record level of 144.7 registered in May.

Conference Board economist Lynn Franco said a nine-point drop in the index reading in just the past two months "underscores an anxiety about future economic conditions." She said it may reflect "concern about the still-unresolved presidential election."

Private economists attributed the confidence downturn to a variety of factors they said are unsettling consumers as the holiday shopping season gets under way.

"The election that never ends has still not ended, gasoline prices are sky high, heating costs are surging, and the stock market is wandering around as if it were lost," said Joel Naroff, chief economist of his forecasting firm in Holland, Pa. "There is some real concern creeping into the consumers' thinking about the future."

Most analysts said, however, they doubt that the decline so far is enough to derail consumer spending during the all-important holiday sales season, especially since unemployment remains at a three-decade low of 3.9 percent.

"I don't think people are going to stop buying Christmas presents just because they don't know who the president is going to be, but there is uncertainty out there," said Richard Yamarone, economist for Argus Research Corp. in New York.

Analysts said they also do not believe the drop in orders for durable goods, items expected to last three or more years, represents a serious threat to the record-breaking economic expansion, now in its 10th year.

They predicted the Federal Reserve is still on track to achieving its "soft landing," in which interest rate increases by the Fed restrain growth enough to keep inflation under control without bringing on recession.

"A soft landing isn't a painless landing," said Martin Regalia, chief economist at the U.S. Chamber of Commerce. "There will be some pain in some sectors."

Mr. Regalia said some of that weakness is already being felt in interest-rate sensitive sectors of the economy such as autos and business investment.

"It's clear the economy has received several body blows going into the fourth quarter that would indicate a slowing of the economy and capital spending," said Jerry Jasinowski, president of the National Association of Manufacturers.

The overall economy, which was speeding along at a 5.6 percent annual growth rate in the April-June quarter, slowed to a growth rate of just 2.7 percent from July to September.

The 5.5 percent decline in durable goods orders in October was the first drop since a 13.2 percent decrease in July. Orders had risen by 2.4 percent in September.

The $12.1 billion drop pushed total durable-goods orders down to $209 billion. The decline was led by a sharp 15.8 percent drop in orders for transportation equipment, reflecting cuts in demand for aircraft and parts.

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