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Industrial Activity Drops in October for 13th Straight Month, Longest Stretch Since Great Depression

WASHINGTON (AP) - Aftershocks from the terror attacks helped to depress industrial activity in October for the 13th straight month, the longest stretch of declines since the Great Depression. All the economic weakness, however, had a silver lining: Consumer prices fell.

The latest batch of economic reports released Friday painted a picture of a sinking economy that many analysts believe has slid into a recession. Against this backdrop, companies have cut prices to bolster sales and energy prices have fallen in response to weak worldwide demand, thus keeping a lid on inflation.

The Consumer Price Index, a key gauge of inflation, declined by 0.3 percent in October, following a 0.4 percent rise in September, the Labor Department said. The drop in prices is good news for consumers and highlighted one of the few benefits a weakening economy can provide.

"There will be many more bargains in the months ahead, especially with the holidays approaching," predicted Bill Cheney, chief economist for John Hancock Financial Services.

While heavy discounting and zero-percent financing for cars sent retail sales up by a record 7.1 percent in October, that didn't translate into ramped up production during the month. But it probably helped businesses whittle excess inventories of unsold goods, economists said.

Industrial production plummeted in October for the 13th straight month, falling by 1.1 percent, on top of a big 1 percent decline in September, the Federal Reserve said.

The 13-month stretch of declining activity marked the longest period of falling industrial output since a 15-month stretch that ended in July 1932.

Although manufacturing is clearly ailing, it's not nearly as sick as it was during the Depression, economists said. While industrial output fell by a cumulative 6.5 percent over the 13 months, it sank by 53 percent from July 1929 through July 1932.

Still, the nation's manufacturing sector has been hardest hit by the more than yearlong economic slump and the Sept. 11 terror attacks dealt the industry another severe blow. To cope with the fallout, companies have sharply cut back production, trimmed hours, let go of workers and heavily discounted merchandise.

"The manufacturing recession has entered its 13th month," lamented David Huether, chief economist at the National Association of Manufacturers.

The 1.1 percent drop in industrial activity was the biggest drop since a 1.3 percent drop in November 1990. The weakness was broad-based, with production declining for autos, appliances, high-tech equipment, including computers and semiconductors, clothing, metal products and business equipment.

"If misery loves company, there is both a lot of misery and a lot of firms sharing it," said Joel Naroff of Naroff Economic Advisors.

Operating capacity sank to 74.8 percent in October, the lowest level since June 1983, as companies throttled back production.

The economy shrank at a 0.4 percent rate in the third quarter and many analysts are predicting a bigger decline in the current quarter, thus meeting a common definition of recession: two consecutive quarters of declining economic output

With inflation under wraps, the Federal Reserve will have leeway to cut interest rates again to jump-start economic growth, analysts said. The Fed cut rates 10 times this year and some economists are predicting an 11th rate cut at the Fed's final meeting of this year on Dec. 11.

The drop in consumer prices in October was helped by a record 6.8 percent decline in natural gas prices, which had soared because of tight supplies last winter.

Gasoline prices declined by 10.7 percent last month, the largest decrease since July, as Americans have cut back on their travel plans in the wake of the attacks, and crude oil prices have tumbled.

Fuel oil prices fell by 5.2 percent in October, the largest drop since April 2000.

The drop in energy prices helped to push down transportation costs in October, which fell by 2.2 percent. Airfares dropped by 2.5 percent, the biggest decline in a year.

Prices for lodging, computers and women's clothing also fell.

Food prices, however, rose 0.5 percent, as higher prices for poultry, fruits and dairy products outweighed lower prices for beef and vegetables.

The "core" rate of inflation - which excludes energy and food prices - rose by 0.2 percent in October, the fourth monthly increase of that size, suggesting that most other prices were well-behaved, economists said.

So far this year, consumer prices have risen at an annual rate of 2.1 percent, compared with a 3.4 percent advance for all of 2000. The moderation reflects sharply lower prices for energy products.

-- Anonymous, November 16, 2001

Answers

Must be my fault, I haven't needed to buy much for a couple years...

-- Anonymous, November 16, 2001

Brooks,

Don't worry about it. Hubby has been taking up your slack. Since we moved, he has been on a spending spree. He isn't getting anything for Christmas, cause he done bought it all. ;)

I'm still trying to recover from the faint of the size of the check for the down payment! That was enough spending for me for a long time.

apoc

-- Anonymous, November 16, 2001

Well, I guess that I could go out and buy some gasoline and rice flour. Would that help?

-- Anonymous, November 16, 2001

Pre 9/11, Mom, brother and I had been paying down the bills quite diligently. Once 9/11 dawned, and we saw the disaster unfold on T.V., serious prepping mode was re-entered, spending ~$2,000 in two months. Ergo, the bills have shot through the roof again, but we're (knock on wood) in much better shape now.

Hey, do we get medals for spending? (You know, "Contributions to the patriotic cause" and all...) Heh! :-)

-- Anonymous, November 16, 2001

If any of you live near a Big Lots--go visit! If they have the same stuff as ours, you'll find some terrific gourmet items. Besides, capers, pesto, all kinds of good canned stuff, those frou-frou bottled tea drinks, Peak Freans cookies at ridiculous prices, a bunch of stuff from Italy (pesto, breadsticks, biscotti, etc.), they have those gourmet packages, you know, like coffee mugs with packs of coffee, etc. Ours even had smoked salmon and Walker's Scottish shortbread, for heaven's sake! You could put together a very nice emergency stash for someone, lol! There are pretty tin boxes of 60 assorted Twining's teas for less than it would cost to buy them in cardboard at the supermarket! They also have individually-wrapped Famous Amos cookies for 99c a box (great for packed lunches), small, medium and large jars of assorted Italian olives, Belgian chocs, oh, all sorts of good stuff.

Do what your president asked of you, go out and spend, spend, spend on good things for your stash!

-- Anonymous, November 16, 2001

Deb! Do we have any Big Lots on the north end of the city?

The only one I know about is down near Groveport, and always has mundane things like paint-chipped china angels, pink dog food, shot glasses from obscure colleges, and boxes upon boxes of makeup that looks like they were dropped in the Olentangy River.

Maybe I'd have better luck at a Family Dollar Store?

My favorite acres of deals place is the outlet mall, outside of the Ohio town with the longest name in America: Washington Court House. There's even a spin off, five miles away. You gotta love this place: it even has a Harry & David outlet, where the after Christmas prices are mind-blowing. Heck, they're mind-blowing now and it's before T- Day.

-- Anonymous, November 16, 2001

Meemur,

That's a darn good question! They took out my town's Odd Lots ~two years ago, and we've been without one ever since. However, you're right on about the Dollar General/Dollar Tree(?) stores - there's one at Rt. 23 & Polaris, and one at Graceland. There has got to be at least one down on Morse Road. They have a pretty good selection of small items and some good deals on food, if you shop around a bit first.

The outlet malls on I-71 (MM 65 and 61, if I remember correctly) are great too! Do they have a hiking/camping outlet store down there yet? (Fondly remembering when The North Face used to have outlet stores down in Kentucky...)

-- Anonymous, November 16, 2001

Girls,

Serious spending can only be done by the guys ya know!

A cub cadet lawn tractor, a new laptop computer (to ward off boredom on the road), a new cell phone (for those times when the phones are tied up at the det), and a new Eagle Talon for him.

Me, I got a stinking T-shirt (and it was given to me!) LOL

apoc

-- Anonymous, November 16, 2001

Apoc,

Now that's an impressive shopping spree! Will you adopt me? (There's this snazzy bracelet I've had my eye on for awhile now...) ;-)

-- Anonymous, November 16, 2001

You'll only get a t-shirt.

-- Anonymous, November 16, 2001

I wouldn't mind a tee shirt, if it fit. Most of the free ones that they give away at events are size small or medium. I guess that the sponsors believe that only people with little bodies participate in their events.

-- Anonymous, November 17, 2001