We fully expect sentiment to drop sharply, putting in place the conditions for much softer consumer spending numbers.

[This is] a significant downside shock, and perhaps a sign falling consumer sentiment is rattling companies, ... A further drop next month will see the [Federal Reserve] easing again.

Once rebuilding gets underway in earnest in the Gulf Coast, we expect much stronger construction numbers across the board. But that will be a story for the very end of this year and into 2006.

Although we expect consumer spending to slow sharply in the fourth quarter, to below 2 percent, as a result of lower auto sales, we expect that GDP will still edge back above 4 percent on an inventory rebound, higher business spending, and hurricane recovery spending.

We remain relatively optimistic about the housing market, but we do accept that activity fell sharply in the immediate aftermath of Sept. 11,

It is impossible to tell how much of the drop simply reflects the inability of the seasonal adjustment to cope with the end of the auto retooling shutdowns, and how much is due to the underlying trend.