>> it was a bad storm. i understand people were hurt and everything of that nature. but it wasn't the dramatic storm people thought it would be. >> susie: irene's aftermath. in some parts of the country, that means travel delays, flooding, no power, and damage estimates in the billions of dollars. >> tom: but other areas are back on track and conducting business as usual. it's "nightly business report" for monday, august 29. this is "nightly business report" with susie gharib and tom hudson.

"nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening everyone. call it the irene effect. a day after the massive hurricane slammed the east coast, stocks on wall street were in rally mode. as millions of americans were cleaning up from the storm, investors went on a buying spree, relieved, tom, that hurricane irene wasn't as bad as expected.

>> tom: susie, it certainly felt like a relief rally. also powering up stocks? some good news on u.s. consumer spending and a giant greek bank deal, giving hope to that country's financial problems. the dow surged 254 points, the nasdaq jumped 82 and the s&p 500 added 33-- closing above the 1,200 level for the first time in two weeks. still, trading volume was the weakest since mid-july. >> susie: despite the positive energy on wall street, the east coast is still grappling with the aftermath of irene. suzanne pratt reports. >> reporter: under sunny blue skies in new york's time square today, it was hard to comprehend the wrath of hurricane irene. for much of manhattan, it was a normal monday back at work. the new york stock exchange rang the opening bell on time and so did the nasdaq. still, commuters from suburban towns outside new york had trouble getting in.

many train lines were cancelled or operating on reduced service. and from the beaches of north carolina to the coast of maine, millions of homes and businesses remained without power and, utilities say it could take days, and in some cases weeks, to restore electricity. much of the damage is water- related, particularly in new jersey and vermont, where flooding is extensive. still, the wrath of irene was less than expected. economist steve richiuitto believes the financial impact will be modest. >> the numbers that are being bandied about are basically anywhere from $10 billion to $40 billion. but if you look at it in terms of its effect on quarterly g.d.p., third quarter g.d.p., how much could you take off of that? well the answer, basically, is about 0.1%. that's nowhere near the $45 billion in private insurance damage from hurricane katrina in 2005, but many experts say it's too early to calculate the full impact of irene, especially with

some towns still underwater. and then there's the yet-to-be- tallied impact to retailers. some chains, like home depot and lowes, benefited from storm preparations. others, however, suffered as irene forced many to shutter during a busy weekend. analyst r.j hottovy said late august can be important for many retailers. >> typically in a period like this, especially being back to school season, a lot of the purchases are simply going to get delayed into this week. the problem for retailers? this potentially could move inventories to a markdown situation. >> reporter: experts say the damage to businesses could have been much meaner had irene arrived during the work week. still, for many firms it could take weeks to clean up and get operations back to normal. suzanne pratt, "nightly business report," new york. >> tom: irene tied up the nation's transportation system well beyond the east coast over the weekend, and much of it still remains snarled. the storm forced airlines to cancel more than 13,000 flights

between saturday and today, and flooding is creating problems for railroads and trucking companies. diane eastabrook has details. >> this map of black tracking firm shows what a normal sunday night looks like in the northeast corridor. this is what it looked like last night. today airports across the u.s. tried to accommodate travelers sidelined by hurricane irene. more than 12,000 flights were cancelled over the weekend. another 1500 were cancelled today. frustrating travelers. >> i would say just to make sure that anybody that is flying, just double-check, confirm that you have a confirmed seat and are you flying on the day are you supposed to. >> morningstar airline analyst lucos estimates the storm could cost airlines up to 110 million in what has been an expensive year. >> this is the third major shut down in the airline industry over the past nine months. so it almost happens once a quarter. there is an early storm in december.

the one in january and now this. going all the way back to 2010 there was the volcanic ash in up. >>. so it is something the airlines always have to deal with. >> reporter: flooding also forced amtrak to halt passenger traffic on two-thirds of its 25 east coast lines today. meanwhile, freight haulers also stymied by the storm. fedex diverted planes to hubs in indianapolis and memphis. while the company is flying today, it says washed out roads and bridges are causing delivery delays that could last for much of the week. while trucking company yrc says it's operating throughout the affected areas, many of its customers closed their businesses, so delivers to them will be delayed. economists haven't yet estimated how much the storm could cost the transportation industry. but they think it will deal an expensive blow in an already depressed economy. dianestabrook, nightly business report, chicago. >> tom: oil prices ended higher today as traders shrugged off any drop in demand due to irene. most refineries in the northeast were spared significant damage

from the storm. crude for october delivery gained $1.90 to settle at $87.27 per barrel. trading on the nymex began as usual today, although volumes were thin. >> susie: our next guest says the economic impact from irene could actually be a positive. with us now, ryan sweet, senior economist at moody's analytics. >> thank you for having me. >> susie: a positive, irene, i never thought i would put those wudsing to. are you saying there is a silver lining to all this? >> i think so i think even though it's hard to sea on the surface i think irene will actually provide a slight boost to the economy over the next few weeks. particularly in the hard hit areas as rebuilding and cleanup beguns to kick off in ernst. >> susie: let's take a look. you put together a list for us of some of the sectors of economy that would be winners and losers. let's take a look at the winners list at the top there, you have grocery stores, building material and supplies stores and

construction. so are these benefitting from prestorm irene or post? >> going to be both. grocery stores definitely benefitted as people in the northeast rushed out and looked for the necessities. i was out looking for water. it was hard to find anywhere around pennsylvania. people also were going to building supply stores, loading up on flashlights, plywood to prepare for the storm. construction is going to really benefit over the next few weeks as rebuilding kicks in. demand for temporary construction workers will definitely rise over the next few weeks. >> susie: all right. let's take a look at the sectors that won't do as well, that will be the losers so to speak. and on your list you have tourism, restaurants, insurance, transportation, airlines, we just heard the report from diane on that, local governments. how bad is it going to be for these sectors? >> well, i think it could have been a lot worse for insurers. if you look, they would have been better off if irene never occurred. but given that she ended up

being much less severe than many had first feared, i think insurers are still going to be a little worse off than they were a few weeks ago. local governments, timing is everything. and irene hit at a terrible time for state and local governments. their fiscal situations are in difficult shape to say the least. and i think it's going to be a tough go for the next few months because they really didn't have much wiggle room to front many of these expenses. but fortunately i think the federal government will step in and help fill the void. >> susie: and so then the question is, is what impact does all of this have on these coastal cities and states that have been impacted, and any chances of recession coming to these communities? let's take a look at your map state-by-state and get a recession status update. and looking here, nevada, the one state in red that you say is already in a recession status, the ones in orange are at risk, new

jersey, tennessee, mississippi, alabama and so forth. and the green ones are mostly in recovery. so did irene, is irene going to push any of those green states closer to recession? >> many of those green states are flirting with potentially falling in recession am but i think we should avoid it we are seeing signs of recovery from coast-to-coast. even nationally i think irene is not going to have a measurable impact on third quarter gdp. i think at the most it is going to shave off a tenth. we'll get that back and more in the fourth quarter. but if you look down in the northeast, i think those areas that are most at risk are the metro areas tied to tourism, including ocean city, new jersey, atlantic city, new jersey. areas like that are most accessible because i think tourism is going to be slow to come back. >> all right. we're going to be watching all of those numbers very closeliover the next couple of weeks and we really thank you, ryan, for coming on the program tonight. >> thank you for having me. >> and we've been speaking with rye ran sweet, senior economist at moody's

analytic. >> tom: president obama is hiring. he wants to bring on princeton economist alan krueger as the new head of the white house council of economic advisers. krueger is an expert in labor markets and, if approved by the senate, he will help president obama in the urgent task of finding ways to create more jobs. darren gersh on what that might mean. >> reporter: with alan krueger by his side, the president laid out some of the agenda items he wants his new chief economist to work on, ideas the president says that are bipartisan. >> next week, i will be laying out a series of steps that congress can take immediately to put more money in the pockets of working families, middle class families, to make it easier for small businesses to hire people, to put construction crews to work rebuilding our nation's roads and railways and ports and all the other measures that can help to grow this economy. >> reporter: if he is confirmed by the senate, krueger's job will be developing policies that can get the entire economy moving again.

but krueger is also one the nation's leading labor economists, and the center for american progress' heather boushey is counting on krueger to address some pressing needs. >> thinking about what we need to be doing for the unemployment insurance system and focusing on those long-term unemployed, probably thinking about what we need to do for younger workers or other workers that have been incredibly hard-hit by the recession. >> reporter: but whether members of congress are receptive to the president's new ideas will depend on what message lawmakers take back with them from a summer recess spent with angry voters. >> it's not obvious that they will conclude that they personally did something wrong. some came to cut spending-- they didn't cut enough. they are going to go out and do that. some came to create jobs-- they didn't do enough of that. it's not clear you are going to get any unified action. they might come back chastened, but they won't know what to do next. >> reporter: douglas holtz-eakin chaired the council of economic advisers under president bush. he says the obama administration should be focused on policies to boost long-run growth, and that means taking on big issues like tax and entitlement reform.

>> and this has been the mistake of the administration to date. in trying to frame economics as a bill or a piece of legislation and not a philosophy. >> reporter: of course, that's not how the administration sees it, and in a major speech after labor day, the president intends to lay out his philosophy for moving the economy forward. darren gersh, "nightly business report," washington.

>> tom: stocks began the week in the green with broad-based buying. the gains bring the dow industrials back to almost even for the year. let's get to tonight's "market focus." if you can say one thing about the market, august has been a month of wild volatility. most sessions have seen the dow make moves from the day's low to the day's high of at least 200 points. today was no different. here is dow so far this year. today's better-than-2% gain puts the dow down just a fraction from where it began the year. and, above 11,500, the dow is above its mid-august high after the steep sell-off from late july. bank of america again topped the dow gainers, adding another 8%, continuing the rally from last

week, when warren buffett announced his stake. b. of a.'s latest move to raise money was today's agreement to sell half its stake in china construction bank. b. of a. will make more than $3 billion from that sale while still owning 5% of the china bank. since buffett announced his investment thursday, bank of america has added $11 billion to its market value. fellow dow component travelers shows just how strong property casualty insurance stocks were during the first trading day since hurricane irene. travelers jumped more than 5% as insured losses from the storm are expected to be less than feared. shares of travelers are above where they started last week as irene was gathering strength. hartford group led the broader financial sector, gaining 13%. while overall volume was lighter today, hartford saw heavier- than-average trading. allstate gained 8.5% and tower group, which has a big exposure

to the new york area, rebounded almost 7%. each of these stocks sold off late last week as irene approached the northeast. drug giant pfizer continues its rebound from its 2011 low earlier this month. shares added another 3.7%. the stock is up more than 10% in three weeks. a blood-thinning drug pfizer is developing with bristol myer- squibb is receiving rave reviews in a clinical study. it reduced the stroke risk in certain heart patients by 21%. finally, today's gains extended to europe. this exchange-traded fund follows 350 european stocks. it bounced more than 2.5%. nice move as two greek banks, alpha and e.f.g., agreed to merge, creating greece's largest bank. the deal raises confidence more bank deals could shore up confidence. and that's tonight's "market focus."

>> susie: fitch ratings has settled negligence claims brought by the california public employees retirement system, or calpers. the biggest u.s. pension fund sued over fitch's ratings on structured investment vehicles that later collapsed. under the settlement, fitch will not make a payment to calpers. two years ago, calpers sued fitch, moody's and standard & poor's, alleging the inaccurate ratings cost $1 billion in losses. calpers has not commented on the other lawsuits. >> tom: we saw a bright spot for consumers in july. spending rebounded last month as americans bought more cars. sales increased by 0.8% in july, the biggest increase in five months. spending was lifted by a rise in income, which rose 0.3%, and a slowdown in the savings rate, to 5% from 5.5%. the head of consumer credit ratings agency fico tells us americans creditworthiness is improving, but is not where it needs to be. we spoke with c.e.o. mark greene, who began with some bright spots for consumer credit.

>> consumers have done a good job actually focus on their credit cards, in fact, they paid down their debt on credit cards and are now running at the lowest default rates on credit cards in 17 years. there's similar health around automobile loans and student loans. so a lot of the credit portfolio that people normally think b consumers have done a pretty good job as they move from a period of dissaving to saving and sort of paying off those balances. so where are the problem spots. problems really in the housing market. the housing market still has easily another 12 or 18 months to go to work through this really large backlog of foreclosed properties and properties that are underwater. in fact, we think these days that about a third of home sales are of foreclosed properties. so long as that remains true, consumers are feeling very nervous about their own home ownership. their home is likely underwad elevatorer -- one out of three homes is underwater. until we see an improving in the house market t is the mortgage that will be an anchor on consumer credit.

>> tom: isn't that the problem when we are talking about credit-card debt, are you talk will about a stub toed. when are you talking about mortgage debt that is the cardiac problem, right, a much bigger debt issue than anything else? >> it is a much bigger issue, you are exactly right given the size of mortgages. and it's also more complicated because there are several factors driving the mortgage issue. one is simply the problem of people not being secure in their jobs. so employment actually correlates highly with what goes be in the mortgage industry. if you don't see good job prospects for yourself or your neighbor, are you really nervous about having a big liability such as a mortgage. so you are resistant to buying a new home or refinancing your existing home. the other problem is one of confidence. in an era where you see the kind of shenanigans going on in washington, the kind of volatility in the stock market, you feel really nervous. and people who are nervous do not want to undertake large obligationsment and we see this expressed in recent consumer confidence numbers which are running close to the lows-- the lowest levels they've been at since 1980. so consumers are very worried.

>> tom: they got the tool kit when it comes to credit worthiness of americans and works with lenders on mortgage workouts, for instance. what needs to be done to fix that process, though t to streamline it and to get banks and the borrowers both engaged to come up with an equitable outcome? >> well, a couple things it is a great question. one portion of the mortgage foreclosure and delinquency problem has a specific solution and that is the portion of consumers who actually can afford to pay their mortgages but choose not to. they see their neighbor down the street not paying their mortgage and getting away with it. or they feel they shouldn't pay because their own home is underwater. this is what is often referred to as strategic defaults. banks simply need to do an early intervention, go to the consumer, the homeowner and say is everything okay. do we need to do a workout or restructuring that is about four troubled mortgages are strategic defaults. for the others what we are looking for is some improvement in levels of employment stability. some improving confidence in the business environment. and perhaps what you are

hearing talked about in washington these days, a variety of new home mortgage support programs, making it possible for consumers to afford their mortgages through some reduction in the monthly principal or interest payments. >> we appreciate some of those ideas. our guest this evening mark greene c.e.o. of the consumer credit rating company. >> susie: here's what we're watching for tomorrow: minutes from the federal reserve's august 9 meeting are released, and we'll get an update on housing prices from the s&p/case shiller home price index for june. also tomorrow, our "word on the street" is "dividend." we'll look at companies that pay shareholders to hold stock. the national transportation safety board gives tomorrow its final report on last year's pipeline explosion in san bruno, california. eight people were killed and 38 homes were destroyed in the september 9 fire and explosion. the state has already ordered pg&e to reduce pressure in some of its older pipelines and

conduct systemwide pressure tests. last week, the utility proposed more than $2 billion in pipeline upgrades, with customers bearing nearly all of the costs. >> tom: meantime, house republicans are going to try to block or delay about half a dozen environmental rules when congress wraps up its summer recess. some g.o.p. lawmakers say those rules are driving up the cost of doing business and making it difficult for employers to hire new workers. house majority leader eric cantor says in a memo to his fellow republicans the rules were expensive to implement and created a "cloud of uncertainty."

>> susie: are computers to blame for the volatility in the stock market? some observers say yes, and point to computerized high- frequency trading systems. here with some thoughts is harry lin. he's executive in residence at idealab, a technology incubator in pasadena, california. >> they say that the stock market is not the economy, and i say, "thank goodness," because with all the recent trading volatility, you could mistake our economy for a yo-yo instead of the depressing flat line that it actually is. if i believe what i read, the cause of much of this volatility is computers. or rather, software. specifically, high-frequency trading systems and trading algorithms.

some say that 70% of all trades on the new york stock exchange are algorithmic instead of manual. it's like those science-fiction scenarios in movies where computers get out of control and take over the world, turning us puny humans into slaves or batteries. while i don't know the exact pervasiveness of algorithmic trading, i do know that it's having an effect on the high- tech labor market. top-notch software engineers and highly skilled i.t. people are being lured into stock market jobs instead of, say, clean energy or e-commerce, because the needs of the machines are enormous and arbitrage promises more money than you'd make at some lowly internet startup or nasa, for example. i'm not naive enough to trash computerized financial engineering categorically, but i find it somewhat dismaying that all this tech talent is going toward millisecond-arbitraged buying-and-selling instead of, i don't know, making the world a better place. okay, so maybe that is naïve. i'm harry lin.

>> susie: you can keep up with nbr any time. we're online at nbr on pbs.org. there, you'll find all the market data from the program and you can watch any programs you may have missed. you can also follow us on twitter, @bizrpt, or my personal feed, @sgharibnbr. we're also on facebook at bizrpt. >> tom: finally, get ready for twister 2.0. fans of the party game will soon be able to play, putting themselves in precarious positions, with a new video game out this holiday season. no twister mat or spinner is needed, since the game will be played on the microsoft kinect. that's the game console that lets people play without controllers. the twister game will cost $49 and will be in stores on november 1. susie, do you think it will be as much fun as the original?

>> it sounds like the perfect game for you, tom. >> tom: pretzels and twister in the hudson household. that's it for nightly business report. have a great evening, susie. >> susie: you do too. thanks for watching, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org