Reports Expected to Confirm Recession

A slew of data due out this week will shed light on how severely the Sept. 11 attacks have damaged the U.S. economy. And analysts warn the picture these key reports will reveal is not going to be pretty.

Eagerly awaited reports will be released on October unemployment and manufacturing and on economic growth in the third quarter, which ended Sept. 30.

Analysts expect all to show sharp declines and to confirm the U.S. economy, which was weak before Sept. 11, sunk into a recession after the attacks.

But the true question will remain unanswered: Will the expected bad readings imply an evolving, lasting trend or will they reflect one-time effects from the attacks that will soon disappear?

“It still leaves unresolved questions of how much of this has been a knee-jerk reaction to heightened uncertainty that will gradually abate as time goes by and how much of this is really kind of the last straw breaking and things tumbling further,” said Richard DeKaser, chief economist at National City Corp. in Cleveland.

Hands down, the most closely watched U.S. economic indicator this week will be the government’s monthly employment report.

The report released earlier this month covered the month of September but due to the way the information is collected, it reflected almost none of the impact of the Sept. 11 attacks.

But the report for October, due out Friday, will fully incorporate the effect of the attacks on the U.S. job market.

Wall Street economists on average estimated last week the U.S. unemployment rate climbed to 5.2% in October, up from 4.9% in the prior month. If realized, that would be the highest jobless rate since March 1997.

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Other economic data expected this week:

* Tuesday, the Conference Board will release its survey of consumer confidence for October.

* Thursday, the National Assn. of Purchasing Management is expected to report that its gauge of factory activity sank in October, suggesting the yearlong recession in the hard-hit manufacturing sector continued.

* Thursday, the Commerce Department will report on September income and spending.

* Wednesday, the Commerce Department will issue its first estimate of U.S. gross domestic product in thethird quarter.

* Thursday, the Commerce Department will report on construction spending during September.

* Friday, the Commerce Department will issue its September report on factory orders.