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CNN LIVE EVENT/SPECIAL

America Recovers: Some Economists Now Using Word "Recession"

Aired October 11, 2001 - 06:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: Analysts say it's too early to know what's ahead for the economy, even with Wall Street's rebound to nearly pre-September 11 levels.

CNN's Brooks Jackson reports some economists are now using the word "recession."

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Next: more Americans out of work -- hundreds of thousands more like these in Virginia.

UNIDENTIFIED MALE: I don't know what the unemployment office looked like a month ago or two months ago, but I'm sure it wasn't quite this crowded.

JACKSON: The layoffs are extending far beyond airlines and beyond hotels and restaurants -- as many as 30,000 to be laid off at Boeing alone.

UNIDENTIFIED MALE: There is all of us that feel sad.

JACKSON: Affecting all levels: Wall Street is laying off investment bankers. Oil and gas drillers are cutting back -- drilling down 12 percent since July. Even Toys 'R' Us is delaying the open of the biggest toy store in the world on Times Square.

The economy, most now agree, in full recession.

DOUG DUNCAN, MORTGAGE BANKERS ASSOCIATION: We think total job losses upcoming -- roughly a million.

JACKSON: But there are bright spots: Las Vegas devastated the first week -- hotels were 97 percent full last weekend -- back to normal.

Auto sales, fueled by zero percent financing offered by manufacturers, are surging and could even hit a record this month.

DIANE SWONK, BANK ONE: Sales on the first 10 days of October were just absolutely stunning.

JACKSON: And unlike the last recession, energy prices are not rising but dropping. Crude oil: down roughly 25 percent since September 11. Gasoline: down 17-and-a-half cents. Diesel fuel: down 12 cents. Home heating costs should be much lower this winter too.

With mortgage rates dropping, nearly twice as many homeowners are lining up to refinance mortgages, many of them pulling out extra cash -- billions of it.

UNIDENTIFIED MALE: We'll see about $40 to $50 billion of additional consumer spending in the economy as the result of the ability of consumers to take out cash from their mortgage.

JACKSON: Economists also expect the Federal Reserve to cut short-term interest rates even further ...

(on camera): ... while Congress considers billions more in additional tax cuts and extra spending to jolt the economy. So many economists are saying the economy eventually will come back even stronger than they have predicted before.

UNIDENTIFIED FEMALE: The light at the end of the tunnel that all of us have been waiting for is much brighter than it was in the weeks before September 11.

JACKSON (voice-over): Much depends on how consumers react -- confidently or fearfully. It's too soon to measure that reaction precisely, but many retailers say customers already are coming back.

Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

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