Bizzy’s Biz-Econ Briefs (102005)

Economy Humming Despite Storms’ Impact

The proverbial Energizer Bunny Economy keeps going:

Storms Fail to Hamper Economic Activity

Oct. 19, Washington–Many parts of the country managed to log decent economic activity in September and early October even amid the soaring energy prices and other repercussions from hurricanes Katrina and Rita.

The Federal Reserve’s survey released Wednesday provided the latest snapshot of business conditions nationwide in the aftermath of Katrina, the most costly natural disaster in U.S. history, and Rita.

“Economic activity continued to expand … Most districts described the pace of activity as moderate or gradual,” according to the Fed survey.

Meanwhile, the Commerce Department reported that housing construction unexpectedly rose in September to the highest level in seven months, at least temporarily defying expectations of a slowdown in the booming housing market.

The Fed’s survey is based on information collected before Oct. 11 and supplied from its 12 regional banks.

I’ll take it.

Jobless Claims Down, Energy Costs Down

More bad news for those waiting for the economy to tank–jobless claims and energy costs are both way down:

Jobless claims plunge
Thursday October 20, 8:47 AM EDT

WASHINGTON (Reuters) - The number of unemployed U.S. workers asking for initial jobless aid fell a larger-than-expected 35,000 last week on the back of fewer hurricane-related claims, the government said on Thursday.

First-time jobless claims, a rough guide to the pace of layoffs, fell for the second straight week, dropping to 355,000 the week ended October 15 from a revised 390,000 the previous week, the Labor Department said.

Labor attributed about 40,000 of the new claims to people put out of work by hurricanes Katrina and Rita, bringing the cumulative total of claims stemming from the storms to 478,000 since September 3.

The weekly number of claims fell farther than economists’ forecast for 368,000, and was also down from the original reading of 389,000 the week ended October 8.

It would be interesting to see a scorecard during the past 5 years, and the 8 years before that, of “better than expected” vs. “worse than expected” results vs. “expert” predictions. Something tells me that “better that expected” would win hands-down during the past 5 years, and the “worse than expected” would have won in the 8 years before that. If true, why do you think would that have been the case?

More good news–In the energy sector, prices are falling (as of noon): “Natural gas drops 6%; crude near 3-month low below $60″

McDonald’s Experimenting with Outsourcing Drive-Thru Order-Taking

CBS News and AP report:

McDonald’s Corp., the world’s largest restaurant chain, is testing the use of remote call centers to handle drive-thru orders in an effort to improve service.

Company officials said the idea, being tested at a small number of restaurants in the Pacific Northwest, is aimed at reducing the number of mistakes at the drive-thru window.

“If you’re in L.A. and you hear a person … with a North Dakota accent taking your order, you’ll know what we’re up to,” McDonald’s Chief Executive Officer Jim Skinner said during a presentation to analysts Thursday in New York.

CBS News Radio Correspondent Lou Miliano reports the strategy is based on the theory that mistakes come from the order-taker, not the cook line. Sending orders directly to a call center and back to the grill could also allow McDonald’s employees to focus on delivering better customer service, the company said.

“You have a professional order taker with strong communications skills whose job is to do nothing but take down orders,” said Matthew Paull, the chief financial officer.

Paull said a “heavy percentage” of complaints the company receives are from drive-thru customers who got the wrong order.

I anticipate that this will work out very well. Even if they have to pay a higher fully-loaded (i.e., with benefits) hourly rate to the remote call-center company, they should be able to save money, because at the call center they will on average have far less than the one drive-thru order taker at each store they have now. If the accuracy goes up and the customer complaints go down, expect others in the industry to follow McDonald’s lead.