The U.S. economy is likely to slow in response to high energy costs and damage from two big hurricanes enough to make it "feel like a recession," even if one is unlikely, the Conference Board said Oct. 17. The business research group said the high cost of energy and the impact of hurricanes Katrina and Rita would have "a significant impact on the U.S. economy, putting upcoming holiday retail sales at risk."
But it said these events also are "unlikely to trigger a recession."
The group said the two hurricanes are likely to wipe out as many as half a million jobs and lead to economic output losses of up to one trillion dollars, which would slow the economy to a growth rate of less than 2% for at least one quarter. But the group said the economy "will feel like it is moving forward as early as the first quarter of 2006 and this momentum will continue into the spring as massive rebuilding gets underway."
"Faced with higher energy prices, higher interest rates and slower job growth over the next few months, consumers' willingness and ability to spend will be severely tested," the board said. "If consumers curb their spending, it could spell major trouble for retailers in the rapidly approaching holiday season."
Copyright Agence France-Presse, 2005