Slump has some surprising winners, losers
Downturn has anomalies tied to Sept. 11 and consumers' resilience.
In the midst of an unexpectedly deep high-tech downturn, StorageTek is prospering - also in an unexpected way.
The Louisville, Colo., company makes computer backup products, whose importance was underscored by the tragic collapse of the World Trade Center towers. Some Manhattan firms with adequate data-backup systems resumed business quickly. Others lost vital information, on top of the terrible human toll.
Although StorageTek is hardly unscathed by the economic downturn, demand for data-recovery systems has helped the company boost sales - and double its share price - this year.
In any slump, some companies and some industries get whacked harder than others. But StorageTek's case highlights how the current economic slump has taken some surprising twists.
"This is a very unusual recession, because so far housing and [big-ticket consumer goods] are doing very well," says Bill Dudley, a principal economist at Goldman, Sachs & Co. in New York.
Typically, economic expansions wind down as inflation perks up, the Federal Reserve tightens interest rates, and consumers begin to pull back. This time, businesses took the lead by cutting spending on everything from plants to Palm Pilots. "There never was any inflation," Mr. Dudley says.
Among the unusual patterns now unfolding:
Some analysts predicted that investment in productivity-enhancing technology would continue even during an economic slowdown. Instead a high-tech collapse, from computers to fiber-optic networking, helped initiate the current downturn.
Homebuilding, usually among the first industries to falter as a business cycle turns, has held up well. The construction industry has added jobs over the past 12 months.
Financial industries - banking, insurance, and real estate - have also added jobs over the past year. This is a sharp contrast to the 1990-91 recession, which was marked by fallout from bank-fueled overbuilding.
US manufacturers, after two decades of getting leaner and more automated, were seen as relatively healthy. But for all their progress, the slump has hit them especially hard. Employment in this sector has plunged a staggering 6 percent in the past year. One reason: a rare alignment of slumps in the US and major export markets.
Overall, manufacturing entered its 13th month of recession in October. Output by makers of industrial equipment, electronics, and autos are down at least 10 percent this year.
Zero-percent financing spurred record auto sales in October. But with inventories high, car production actually fell 4.2 percent.
If demand remains high, output could rise. But the broad outlook for manufacturing remains bleak.
"There is not one sector that has positive growth," says David Huether, chief economist of the National Association of Manufacturers in Washington. More than a million jobs have been lost in manufacturing in the last year.
But it's still a good time to be looking for work as a nurse.
The $1.3 trillion healthcare industry is growing. That includes pharmaceutical companies, hospitals, nursing homes, and assisted-living centers.
Many defense firms are doing well. Teachers are in demand.
But in this slump, many educated white-collar workers have joined the ranks of the unemployed, along with the the less-skilled workers who often get sacked in a recession.
The country's pool of unemployed managers and professionals has jumped 63 percent to 1.2 million in the past year as the jobless rate rose from a low of 3.9 percent to 5.4 percent in October.
Then there is the energy business. Some thought it might boom during the current period of turmoil in the Middle East. But it has been dealt a blow by low oil and gas prices - thanks in part to surging supplies from Russia.
"The economics now are quite bad," says Jerry Jordan, past chairman of the Independent Petroleum Association of America, a trade group for US drillers.
The number of rigs drilling for gas or oil nationwide is down 30 percent to 993 in the past two months.
Regionally, long-booming Western states are bearing the brunt of the tech collapse. Mary Daly, of the Federal Reserve Bank of San Francisco, says the technology-manufacturing sector in nine Western states lost jobs at a 6 percent annual rate in the first nine months of 2001.
This contraction, the sharpest since 1991, has dragged down job growth in the West to a meager 0.1 percent rate.
But the war on terror has boosted orders for some firms.
The $900 billion mailing industry, for instance, may help sort out the anthrax scare.
"We have seen renewed interest in postage meters for smaller businesses which now use postage stamps," says Michael Critelli, CEO of Pitney Bowes, a maker of mailing equipment.
Metered mail can be traced back to the sender's machine. This may reassure people on the receiving end, since, presumably, someone sending anthrax in a letter would not use a postage meter.
Pitney Bowes also expects to expand its mail-management business, a service it now provides at 1,300 sites. "People ... want professionals to manage their mail," Mr. Critelli says.
Staff writer Amanda Paulson contributed to this report.