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'Recovery will come later but be stronger'

By Joan Gunin -- Furniture Today, December 16, 2001

KEY BISCAYNE, Fla. — The economic scenario for 2002 calls for recovery after February, probably in the second half, and at a stronger pace than if the tragedies of Sept. 11 hadn't happened.

At the Furniture/Today Leadership Conference, Robert Fry, senior associate economist for DuPont, discussed such factors as interest rates, auto sales and unemployment rates.

The U.S. economy is expected to hit bottom between November and February before turning up, Fry said. "Typically, a recession lasts 11 months and the numbers peaked in March 2001, so they could go back up any time."

The gradual recovery that had begun in August was waylaid by the September events, he said.

Asked how the U.S. economy would have fared without the impact of Sept. 11, Fry said, "Without Sept. 11, there would have been a slow recovery. Now, the recovery will come later but be stronger."

He was optimistic employment would bounce back in spring 2002. "Unemployment, a lagging economic indicator, continues to rise after production and manufacturing have recovered," he said. "In our favor is the fact that the population and the labor force are not growing rapidly."

Fry said Sept. 11 resulted in a retail sales slowdown. "We had a big initial drop followed by a good bounce in October, but not all the way back."

As for consumer confidence, which already was dropping before Sept. 11, "We think things are bottoming out," he said.

Fry said the recent big drop in oil prices is acting as a tax cut for consumers. While auto sales improved in October and November, he said they probably would slip a bit in December. "There will be no clear resurgence till 2003."

Manufacturing, in decline since June 2000, this year has been affected by a strong U.S. dollar, which hurts U.S. exports, he said.

Fry noted leading indicators have turned up, and interest rate cuts will boost growth, while slow growth abroad and a strong U.S. dollar will continue to weigh on manufacturing.

Fry

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