Greenspan: Hurricanes Didn't Slow Economy
Nov. 3, 2005 — -- Federal Reserve Chairman Alan Greenspan testified this morning before a joint congressional committee, saying that the damaging effects of the hurricanes have not derailed solid economic growth in the U.S.
"These events are likely to exert a drag on employment and production in the near-term and to add to the upward pressures on the general price level," Greenspan said in his prepared testimony. "But the economic fundamentals remain firm, and the U.S. economy appears to retain important forward momentum."
Other highlights:
Also out this morning, a report that shows the nation's productivity during the third quarter shot up 4.1 percent; much better than the expected 2.3 percent jump on which most economists had been betting.
"Katrina may have devastated the Gulf Coast and cost the area over 400,000 jobs, but it didn't slow things down," said economist Joel Naroff. "Indeed, output surged during the third quarter but workers did not work any longer, so productivity rebounded sharply."
This is a reversal of a trend to lower productivity gains over the past year and many economists believe the "revival" will be short-lived. Today's report is the first of two revisions on productivity during the July-to-September time period.
When productivity growth drops, firms have to hire more workers to fuel growth. So today's report is a not-so-good sign for tomorrow's jobs report.
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