Economy on the Ropes

[Crewleader]

May Day Weekend Edition
May 1 - 3, 2009


Into the Pitch Black Tunnel

Economy on the Ropes

By MIKE WHITNEY

The economy continued to shrink in the first quarter of 2009 at an annual pace of 6.1 percent, making it the worst recession in more than 50 years. Gross Domestic Product slipped into negative territory from January to March for back-to-back quarters of negative 6 per cent growth. The news of falling GDP was preceded on Tuesday by a dismal housing report which showed that housing prices have continued their historic downward plunge with only modest slowing in the tempo of doom. Since their peak in July 2006, housing prices have dropped 31 per cent, falling 18.6 per cent in the last year alone. The rate of decline has decelerated slightly but -- on their present trajectory -- prices are on target to tumble 45 to 50 per cent from their 2006 highs. Another 20 per cent loss in home equity means another $4 trillion loss for US homeowners.

The news on the employment front is equally bleak. In the week ending April 25, initial jobless claims increased by another 631,000, bringing the 4-week moving average to 637,000. Ongoing unemployment claims are now at 6.27 million, an all time record.

According to the Associated Press:“Unemployment rates rose in all of the nation's largest metropolitan areas for the third straight month in March... The Labor Department reported Wednesday all 372 metropolitan areas tracked saw jobless rates move higher last month from a year earlier."

Consumer spending also fell more than forecast, with purchases decreasing 0.2 per cent in March and wages and benefits rising at the slowest pace in three decades.

http://www.counterpunch.org/whitney05012009.html

[damntexdem]

1. No, not at all true -- we can no longer afford ropes!

I would say in the sewer -- but how long will we be able to maintain those?

[leftofthedial]

2. he obviously hasn't been getting the same memos as the talking head crowd

on the teevee.

Knowing that it's as bad as he says, and knowing that the *real* numbers are worse than the "official" propaganda, how bad do you think things really are?

[DemReadingDU]

3. very bad, going to get worse

Chrysler and GM are supposed to shut down for a couple months. That's going to add a lot to the unemployment numbers this summer.

School districts are laying off.

States, cities and towns are having budget problems and making cuts.

Stores will be going out of business because unemployed people don't have extra money for shopping.



:(

[leftofthedial]

4. I keep hearing the DC noise machine telling me things are getting better.

They keep saying we'll have a "recovery" next year.

Meanwhile, it seems nearly everyone I know has lost their jobs, had their hours and/or benefits cut, has a business that is barely surviving, is being forced to cash in what little is left of their life savings...

The number of empty storefronts and 75%+ discounts on merchandise is staggering.

I don't see things getting better for a long time.

[DemReadingDU]

5. the DC noise machine is tryng to instill confidence

Confidence for as long as they can.

Because as you can see, and I can see, and others can see, that too many things are going on that there can be no recovery anytime soon.

There needs to be lots of new jobs created to replace those hundreds of thousands (millions) of people who are now unemployed, or soon to be unemployed from the auto sector. And while Obama is creating some jobs, it is not near the number of jobs being lost.

There will come a time, probably sooner than later, when the number of unemployed people who have lost not only their job but also there home/apartment, are pennyless and hungry, that the DC noise machine will not be able to instill any further confidence. And that's when everyone will know that its really really bad out there.

:(

[roamer65]

6. I predict a peak to trough GDP decline of 5 to 7 percent.

This definitely will be the worst recession since the GD. It will be a "near depression".

"The Great Recession" will be its name in the future.