WGN-TV Show Notes — October 23, 2001
ANCHOR: In the six weeks since the terrorist attacks, the U.S. economy has sunk into a recession.
ANCHOR: And while there may be light at the end of the tunnel, that could be six to nine months away. Money and Real Estate Expert Ilyce Glink is here with an update.
ILYCE: In the past six weeks, New York City has made tremendous progress moving tons of rubble from Ground Zero. Some streets near the World Trade Center have been cleared, scrubbed down and rinsed repeatedly. Yesterday, One Liberty Plaza, a building some feared would need to be razed because of the damage it sustained, welcomed back its tenants. Unfortunately, the national economy isn’t recovering as quickly. Let’s take a quick look at what’s happened with various sectors since September 11th.
GDP down in 3Q (-0.8%)
– 4Q: GDP – 2%??
– Big layoffs
– Industries hurt: Airlines, travel, manufacturing
ILYCE: (COVERS ABOVE) The Gross Domestic Product, the G-D-P, sank nearly 1 percent in the 3rd quarter, according to Dave Seiders, the Chief Economist of the National Association of Home Builders. That means we’re officially in a recession for the third quarter, and several economists expect the economy to contract by 2 percent in the 4th quarter of the year. The current 4.9 percent unemployment figure doesn’t take into account the hundreds of thousands of layoffs in the wake of the attack. The new figures suggest we could be at 6 percent unemployment by Christmas. Finally, the industries hurting the most are airlines, travel and manufacturing. On Friday, the chairman of United Airlines said his company could be out of business by next year. We’re talking about a company that six months ago was trying to become the largest airline in the world. Let’s look at real estate.
Slowed after 9/11
– Listing times tripled
– Interest rates still low – and could go lower
ILYCE: The real estate market slowed in the wake of the terrorist attacks, and volume has not returned to normal in much of the Chicago Metro Area. In fact, the average number of days on the market has tripled in some areas. And, even though interest rates are still low, they’re high compared with where short-term interest rates are. That means mortgage rates could drop further. As we go toward Thanksgiving, here’s what to expect:
Stock market gloom
– Gas/oil prices dropping
– Greenspan drops interest rates
– More layoffs
– Upturn in mid-2002?
ILYCE: I think the stock market is probably going to go down somewhat from where it is. Historically, it’s still overvalued when you look at the price to earnings ratios of various stocks. Prices have dropped, but so have company earnings. Gas and oil prices are dropping, thanks to lower demand, and that should mean lower heating bills this winter. Fed Chairman Alan Greenspan will probably drop interest rates a quarter point at the November meeting and perhaps another quarter point by the end of the year. More people are going to be laid off, but by the middle of 2002, we should start to see some real improvement in the economy.
Oct. 23, 2001.