Monday, October 10, 2005

From the Institute of Trend Research - It's Not the Worst Disaster Ever

CONCORD, N.H., Oct. 7 /PRNewswire/ -- Hurricane Katrina and Rita'saftermath captured the attention of the media and the nation. While terms suchas "unprecedented" and "worst ever" are bantered about, this is hardly thefirst time we have encountered a disaster to dwarf any prior experience.

This is not the most profound devastation in terms of national significance. TheGreat Depression, and attending 'Dust Bowl,' or national recessions that last18 months or longer and thunder across the whole economy are more fittingly'national disasters.' September 11, 2001, Hurricane Andrew in Florida, thewild fires and even the tsunami in Southeast Asia are devastating in terms ofhuman suffering and local economic displacement. In economic terms, the recenthurricanes impacted a small portion of the overall size of the US economy(about 0.5% of this year's GDP, insurance estimates).

The economic reality -someone's pain is another party's gain. It is important to point out that the global economy was already on thebackside of the business cycle prior to the recent storms. The economic impactis likely to exacerbate the economic slowdown in the US. Short-term, therewill be re-allocation of resources, increased fear and speculation surroundingoil/gas prices and some companies -- contractors, owner operated trucks andscam artists making quick money.

The long-term negative impact will be pricepressures (inflation), rising interest rates and possibly increased deficitand debt concerns. On the positive side it is estimated that some 300-500,000new homes will need to be built or remodeled. Some commodities such as steel,cement and lumber will face shortages. IT spending will expand as localbusinesses rebuild their infrastructure. Fuel prices will continue to be agrowing concern going forward for consumers, businesses, retail salesprojections and the economy.

Plan on a slower rate of growth in the US economy through the next sixmonths with increased opportunities for economic growth in the latter stagesof 2006 and in 2007. Position yourself now to take advantage of economicgrowth by having the factors of production and wealth building in place.

Planon higher prices for most commodities. Keep sufficient inventories, humanresources and the overall system in place to meet increased demand and deliverthe goods.


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