Economy Watch: Industrial Production Dips Due to Sandy
By Dees Stribling, Contributing Editor
U.S. industrial production declined 0.4 percent in October after having increased 0.2 percent in September, according to the Federal Reserve on Friday. The drop was due to the aftermath of Hurricane Sandy, with the largest estimated storm-related effects including reductions in the output of utilities, chemicals, food, transportation equipment, and computers and electronic products.
Even if temporary, the storm has had an outsized impact on certain aspects of the entire economy, presumably because it hit such a densely populated and economically active part of the Eastern Seaboard. Without the storm, industrial production would have increased for the month. “Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate of change in total output by nearly 1 percentage point,” the central bank noted in a statement.
Industrial production wasn’t the only economic indicator affected by the storm, as reported late last week. According to the U.S. Department of Labor, initial unemployment claims spiked to 439,000 for the week ending Nov. 10, an increase of 78,000 from the previous week. The increase was entirely the work of Sandy, repeating a pattern of temporary initial-claim spikes in the wake of major natural disasters, most notably Hurricane Katrina.
Thanksgiving travel edges up this year
According to survey results released on Friday, AAA projects that 43.6 million Americans will travel 50 miles or more from home during the Thanksgiving holiday weekend–Wednesday, Nov. 21 to Sunday, Nov. 25 this year–an increase of 0.7 percent over the 43.3 million people who traveled last year. It’s an indirect indication of the nation’s slowing improving economic health, since travel is generally a kind of non-necessary consumer spending. The increase marks the fourth consecutive year of growing November holiday travel since 2008, when Thanksgiving travel dropped by 25 percent.
On the other hand, the AAA says that median spending during Thanksgiving travel is expected to drop 10 percent to $498, compared to $554 last year. This year’s spending is consistent with historic averages, as Americans continue to focus on travel while finding ways to economize. One way to do that is to take fewer trips by air; some 3.14 million travelers are planning to fly this for the Thanksgiving holiday, down from 3.2 million in 2011.
AAA estimates the national average price of gasoline will drop to between $3.25 to 3.40 a gallon by the holiday, similar to last year’s average of $3.32, which was the most expensive average ever on Thanksgiving. Despite the historically high prices paid by motorists this year, the national average has declined by nearly 40 cents a gallon since early October and should continue to drop through the end of the year. The national average price of gas for Thanksgiving from 2007 to 2011 was $2.75 a gallon.
E-commerce continues its growth trajectory
The Census Bureau reported on Friday that e-commerce sales increased during the third quarter of 2012 by 3.7 percent, compared with the previous quarter. It’s the latest movement in a pattern of rapid increases in e-commerce. Compared with the third quarter of 2011, cybersales were up 17.3 percent.
The third quarter 2012 figures were also a reflection of the increasing share of on-line commerce in the retail realm, which has grown continuously before, during, and after the recession. E-commerce represented 4.9 percent of all retail sales in 3Q12. As recently as 2007, e-commerce was only about 3 percent of all retail commerce.
Wall Street had a mildly up day on Friday, on word that talks about the fiscal cliff were (at least) under way, with the Dow Jones Industrial Average gaining 45.93 points, or 0.37 percent. The S&P 500 was up 0.48 percent and the Nasdaq advanced 0.57 percent.