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Depression
Watch #1: Brother Can You Spare Some Confidence?
December
1, 2001
by Jerald Cumbus (JCMach1)
I know everyone will be completely shocked by what I am about
to say, but here it goes anyway. The U.S. is in a Recession
-- there I said it. That was the official
news from the National Bureau of Economic Research on
Monday. This group, the officiator of recessions since
the 1930's, also officially set the beginning of the recession
as March 2001. The most important indicator, in their
interpretation, was that March 2001 was the high-water mark
for employment in the last business cycle. The attacks
of September 11th have merely served to hasten the decline
according to the group.
While this is bad news, it is something that most people
who follow the economy have been expecting for months.
The second round of bad
news this week was far more disconcerting. According
to the Conference Board, consumer confidence has fallen for
the fifth straight month (down to 82.2). Additionally,
the seemingly higher number for October was revised down to
85.3. While it is clear that the September 11 attacks
were affecting this statistic as well, it was clearly heading
downward long before the World Trade Center. Consumer
confidence is the psychology that underlies the economy.
No propaganda can change these fundamentals. As long
as people are afraid they may lose their job, are worried
about their debt load, and concerned about America's
place in the world chances are the confidence level will continue
to drop. The silver lining is that this indicator is
only at a 7 year low. However, the real danger is that
scared consumers abandon retailers this Holiday Season.
Up to this point the Bush Tax Cuts and other stimulus have
had little to no effect on the US economy. None of the
numbers seem to be supporting this. If anything, the
undermining of the Federal Government's fiscal solvency causes
more uncertainty in consumers and the markets.
Now I am depressed.
Depression Watch is a continuing series that will explore
the numbers, politics, and realities of the US Economy.
Why a Depression Watch? We are in a Recession -- there
is only one thing worse than that. We here at Depression
Watch will keep you informed on this important issue that
affects your pocketbook.
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