Detroit metro economy falters
CharlesB at SPAMCNCL.ci.detroit.mi.us
Fri Dec 1 13:30:46 MST 2000
Metro economy falters
Slowing auto sales have a ripple effect on the overall local business climate
By Mark Truby / The Detroit News
DETROIT -- With automakers expected to report today that new vehicle sales in
November dipped to their lowest levels in nearly two years, evidence is mounting that
the local economy is starting to stumble.
Industry analysts expect U.S. auto sales were down 3 to 4 percent last month
compared to a year ago, with Detroit's automakers experiencing the brunt of the drop.
Analysts predict Ford Motor Co. sales will drop 11 percent, while General Motors
Corp. and DaimlerChrysler AG sales will fall 5.6 and 4.9 percent, respectively.
All in all, it's shaping up to be a disappointing fourth quarter for the industry
in a year that began with blockbuster sales. And the Metro Detroit economy, always in
lockstep with the auto industry, appears to be headed for a similar slowdown.
Already, local retailers report that sales have weakened from recent years as
holiday shopping enters full swing.
Key economic indicators show a decline in overall business conditions.
Comerica Bank chief economist David Littmann said the level of business activity in
Metro Detroit has slipped to its lowest level in more than two years, according to
Comerica's analysis of several economic indicators.
"We are definitely seeing a contraction of the local economy," Littmann said. "When
auto sales slow down, it puts pressure on everything else."
The bad news comes at a time when the nation's economy is still expanding, but at a
much slower pace. The U.S. Commerce Department lowered its third quarter gross
domestic product figures from a 2.7 percent annual growth rate to 2.4 percent, the
slowest pace of expansion in four years.
Heartland hit hard
There is mounting evidence that the nation's industrial heartland, including
southeast Michigan, is being hit harder than much of the rest of the United States.
The closely watched survey of Metro Detroit purchasing managers -- an index of new
orders, production activity and employment -- confirms that manufacturing in the
region has slowed.
The new orders index fell to 43.3 points from 55.2 in November of last year. A
score below 50 means economic conditions are deteriorating.
Experts are quick to note that the economy remains relatively strong and have
carefully avoided terms like recession in favor of the more benign "soft landing."
In the Rust Belt, though, some are saying the downturn is beginning to feel more
like a "hard landing."
"We're coming down off sales nobody thought we could attain in the first place,"
said Diane Swonk, chief economist for Bank One Corp. in Chicago and a former Livonia
"It's important to keep some perspective. We're not talking about moving back to
the 1970s here."
Jobs are still plentiful, inflation remains in check and many consumers and
business owners in Metro Detroit continue to live the good life. Take Leather and Fur
by Design in Dearborn, for example. The shop at the Fairlane Town Center sold 17
Pershing reversible lamb coats this week at $1,400 each
rest at : http://www.detroitnews.com/
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