US economy sways under financial crisis - ACC

03 October 2008 18:37  [Source: ICIS news]

WASHINGTON (ICIS news)--The US financial crisis is afflicting the country’s entire economy with major business indicators showing worrisome signs of decline, a leading chemical industry economist said on Friday.

 

Emily Sanchez, statistics and surveys manager at the American Chemistry Council’s (ACC) economics department, said that “economic reports were decidedly negative this week, with troubling signs that strains in financial markets are hurting the economy”.

 

Sanchez noted that a closely watched manufacturing measure - the purchasing managers index (PMI) - showed one of its worst downturns in seven years.

 

That index, said Sanchez, “clearly indicated a sector in decline”.

 

In addition, “light vehicle sales fell to their lowest level in over 15 years and factory orders are shrinking, evidence of business confidence waning,” she said.

 

While consumers could take some measure of relief in falling gasoline prices, Sanchez said, “the credit crisis, slumping equity markets, and still-declining home values will erode any confidence in upcoming months”.

 

“Spending is falling in real terms and the weakening labor market will intensify this erosion,” she said, noting that federal data show that September payrolls dropped by the largest amount in five years and were larger than expected.

 

Sanchez said that the financial rescue plan under final consideration in the US Congress is needed to restore markets.

 

“Without access to credit, the ability of many manufacturers to pay their bills, purchase inventories, meet payrolls, and make critical investments in new technologies would be severely compromised,” she said.

 

“While the bailout legislation may not be perfect, it will contribute to increased liquidity,” Sanchez said.

 

($1 = €0.71)

 

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Author: Joe Kamalick
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