Industrial Production Still Feeling Wrath Of Hurricanes

WASHINGTON — Big industry production plunged in September by the most since late 1974, largely reflecting fallout from hurricanes Gustav and Ike.

The Federal Reserve reported Thursday that production at the nation's factories, mines and utilities plunged 2.8 percent last month, on top of a 1 percent drop in August.

The Fed estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September. In addition, a strike affecting the commercial aircraft industry also was a factor in the poor showing, accounting for around a half percentage point of the overall decline, the Fed said.

The drop in industrial production in September was the biggest since December 1974, when output fell 3.5 percent.

The latest showing on industrial activity was worse than economists expected. They were forecasting a decline of 0.8 percent.

Crude oil and natural gas production in the Gulf of Mexico were suspended because of the hurriances, contributing to the hit to overall industrial output, the Fed said. Hurricane related shutdown of petroleum refineries and petrochemical producers also factored into the drop. Other manufacturing industries reported outages from the storms, which also held back production last month.

Still, even before the hurriances hit, manufacturing has been feeling the pain of the housing collapse, credit problems and weaker demand from the slowing U.S. economy. Demand for housing related goods and construction materials has been particularly hard hit as the housing slump has dragged on.

Slowdowns in other overseas economies, meanwhile, are expected to sap demand for U.S. exports, which has been a key factor keeping the U.S. economy afloat.

Comments

[Sundialsvc4]

Puh-leeuze.

Hurricanes have been smashing through all of the world's oceans literally since time began. Ships and oil-platforms and you-name-it have always been built strongly against them.

And let me tell you this... I live more than eight hundred miles away from any ocean. I live fairly close to an industrial plant that used to make electric motors, seventy years ago, and when I look inside those windows I still see abandoned equipment there. Down the street, I see the remains of the factory that used to make the belting and power-transfer equipment that was, presumably, driven by all those electric motors.

Now, in case you have forgotten what was going on "seventy years ago," it was a little altercation called World War Two. Which America won, largely because of that plant. That hurricane-proof plant.

Hurricanes affect us now because of "We Sell For Less!" Uh huh, and the only source of that "for Less" product is 10,000 miles away and the only way for the product to get here is by Ship. Which does have to drive-around hurricanes.

But tell me, are "hurricanes" really the problem? No. Sixty years ago, we did not have to tell Sir Winston Churchill, "sorry, can't help you... these pesky hurricanes­..."

I'm looking at a poster from those days which says, "We Can Do It!"

We can. If we only will.