Wall Street shut down on Oct. 29 and 30 for Superstorm Sandy. It was the first time since 1888 that the markets have been closed for two consecutive days because of weather. After the storm come the financial consequences, now estimated to exceed $50 billion, with only about half insured.
Despite all that, the markets didn’t panic. Why not?
Part of the reason is a growing sense that after the financial storms of the past couple of years, and despite plenty of challenges still ahead, the economy really is getting better. Even jittery European markets operated as usual during New York’s shutdown, with light volume and upbeat performance. When the U.S. markets reopened on the Wednesday after the storm, positive economic reports came in quick succession, including the report that everyone awaited: On Nov. 2, the first Friday after Sandy and the last Friday before the election, the Bureau of Labor Statistics said the economy created a better than expected 171,000 new jobs in October. The unemployment rate ticked up slightly, to 7.9 percent, but it was the second month in a row that it stayed under 8 percent. Adding to the mood: the Conference Board’s index of consumer confidence was also up, to 72.2 and the highest level in four years.
But the economy is not turning a corner so much as coming around a long, gradual curve. The consumer confidence rating, for example, is still well below the 90 mark, which some analysts say indicates a truly healthy economy. And now comes the lame-duck session of Congress and attempts to deal with the fiscal cliff. Expect even more caution in the markets as all those politicians, having set their campaigns aside, go about the much harder work of actually governing.
And when it comes to the economy, the rest of the world gets a vote, too. Nov. 7 elections in Greece and the Nov. 8 beginning of China’s National Party Congress promised to turn attention overseas again. So while the election brought an end to political uncertainty and a measure of temporary calm, other uncertainties remain, and—as the old saying goes—the markets hate uncertainty.
Political advertising this election cycle broke all previous records. Both of the major presidential candidates (and their allies) spent more than $1 billion each. More than 13,000 state and local races brought the grand total to at least $10 billion. The big winners in this election cycle were media companies, especially those specializing in digital advertising or those that owned local television stations in battleground states. Here’s a small sample of third-quarter earnings from some major media companies:
- Microsoft’s online advertising revenue grew 15 percent to $655 million. Microsoft’s advertising revenue now exceeds ad sales of 90 percent of the nation’s daily newspapers.
- Yahoo’s net revenue rose 2 percent to $1.09 billion, beating analyst predictions.
- Facebook’s third-quarter revenue was up 32 percent, to $1.3 billion. Earnings beat expectations.
On the other hand, print continued to contract:
- The New York Times Company says advertising revenue fell 9 percent in the third quarter to $182.6 million. The company says it expects fourth-quarter advertising trends also to be down.
- The McClatchy Company, which owns The Miami Herald, The Sacramento Bee, and other newspapers, says advertising revenue fell 5.4 percent to $212 million.
- Gannett owns USA Today and more than 80 other papers, plus 23 television stations, many in battleground states. It experienced both trends: Television ad sales grew 33 percent, to $237 million. Print advertising shrank about 3 percent. —W.C.S.