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What the economy didn't need...
... was the Blackout of 2003, but economists say it isn't likely to sink a recovery.
August 15, 2003: 2:25 PM EDT
By Mark Gongloff, CNN/Money staff writer

NEW YORK (CNN/Money) - The Blackout of 2003 won't exactly sink a U.S. economy on the verge of recovery, but it won't exactly help, either.

The largest power outage in U.S. history disrupted business in several cities in the northeastern United States, including New York, Detroit and Cleveland, affecting 50 million people, or about 17 percent of the total U.S. population.

Though power had returned to many affected areas by Friday afternoon, the normal flow of business was still disrupted. And in Detroit and Cleveland the situation was more dire. Power was likely to be out until Sunday in Detroit, and many people in Cleveland were without running water.

Though many factories, stores, restaurants and other businesses throughout the region lost at least one day of operation, many economists thought it unlikely that the blackout would do major damage to the total U.S. economy.

"This will probably just be a temporary disruption of activity. My guess is that, by Monday, everything should be back to normal," said Northern Trust economist Asha Bangalore. "If things are not coming around by Monday, then we will have to worry about it."

On the other hand, it certainly couldn't help an economy that's only recently enjoyed much stronger industrial activity and corporate confidence, which many economists hope will be the first stages of a broad recovery.

Though the latest U.S. recession ended in November 2001, according to the National Bureau of Economic Research, the national unemployment rate has continued to climb, giving rise to the notion that this is a "job loss recovery."

Policy makers and economists hope tax cuts passed earlier this year will spur stronger consumer spending, which will force businesses to produce more goods and hire more workers to keep up with demand.

The blackout threw up a speed bump for that plan. Though retail sales have been strong lately, there's little doubt they will suffer this weekend.

"Retail sales will have taken a hit Thursday afternoon and then on Friday, when lots of people can't get around and the last thing on their minds would be going shopping," said retail analyst Kurt Barnard, director of Barnard's Retail Trend Report.

Some economists have expressed hope that sales of flashlights, batteries and other essentials will offset some of the negative impact of the blackout, but Barnard was skeptical.

"You just can't compare the impact of a large number of sales of flashlights, which may cost $2 to $4, with lost sales, for example, of hundreds of pairs of shoes, each costing $50 to $200," Barnard said.

At the very least, the blackout seems unlikely to put much of a dent in confidence, since it apparently had nothing to do with terrorism, and Friday brought some not-bad -- if little-noticed -- reports on industrial production and consumer prices.

"I don't think people will be too worried about it," said Scott Brown, economist at Raymond James & Associates. "If things get back up quickly, people will forget about it pretty soon."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.