Commodities remained highly volatile as investors scrambled to make heads or tails out of the bailout deal, and seem to have no idea where to invest their dollars. Oil even soared $25 a barrel in one day, before profit taking ensued and prices eased a bit.

Supply issues in the aftermath of hurricanes Gustav and Ike contributed to the energy uncertainties. Stocks initially took a beating on congressional inaction, rose on prospects for a deal, and fell again once the plan fell apart.

As last week wound down, investors were clearly holding out hope that a deal would be reached by today, with naysayers underscoring that the time for political theater is over – the stakes are simply too high.

Economically Speaking

While Congress debated the merits of the bailout and the prospects for further fallout, numerous sectors of the economy continue to suffer. Analysts once considered the U.S. healthcare sector to be immune from a slowdown, though recent data showed that fewer prescriptions were filled in the first half of the year than during that time frame in 2007, a phenomenon that hasn’t occurred in more than a decade.

Additionally, an insurance commissioners’ survey reported that consumers are visiting their physicians less frequently. Retailers are declaring “gloom and doom” for the holidays as the National Retail Federation predicted that sales activity will increase by only 2.2%, far less than the 4.4% average growth rate of the prior 10 years (at least it’s still a positive number). On the non-profit front, donations are down all across the country, especially in New York, where organizations rely on the philanthropy of Wall Street. Finally, a poll conducted by AARP (formerly the American Association of Retired Persons) found that 27% of employees over age 45 claim they will postpone their plans for retirement because of the uncertain times.

And the news did not get any better from last week’s economic reports. Housing continued to struggle in August, as existing home sales declined by 2.2%, and new-home sales dropped to their slowest pace in 17 years. Durable goods orders dropped by 4.5% as the manufacturing sector remained weak, thanks to transportation. The domestic growth rate, as depicted by 2nd quarter gross domestic product (GDP) was revised down to 2.8% from the 3.3% reported last month, a sign that the prior stimulus package was not nearly as effective as was once believed.

Weekly Economic Calendar

Source: The $700 Billion Bailout Plan Will Remain the Top Story of the Week

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