Job hunters mass for $4 a day work in 1935 and the line unwinds outside a February 2009 New York City job fair. (Photo credit: Associated Press)
By Douglas A. McIntyre
July 31, 2011
Friday’s news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. …
The U.S. has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. …
Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs.
Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.
There are several signs that a recession is firmly in place again and that the downturn could last for several quarters. Most are already easy for the average American to see.
There is almost nothing that damages consumer confidence as badly as a rapid rise in prices. …
2. Investments have begun to yield less
Part of the recovery was driven by the stock market surge which began when the DJIA bottomed below 7,000 in March 2009. The index has risen above 12,000 and the prices of many stocks have doubled from their lows. … However, the market has stumbled in the last quarter. The DJIA is up only 1 percent during the last three months and the S&P 500 is down slightly. …
3. The auto industry
The auto industry has staged an impressive comeback, although its profitability is based as much on the layoffs it has made over the last five years as generating new sales. GM and Chrysler have emerged from bankruptcy. Year-over-year monthly sales improved late last year and through April. May sales stalled. …
4. Oil prices
Oil prices are supposed to drop as the economy slows as they did in 2008 and early 2009 when crude fell from over $140 to under $50. … Recently, crude has moved back above $100 and appears to be stuck there regardless of the economic situation. …
5. The federal budget
The federal budget deficit has decimated any chance for another economic stimulus package which many prominent economists like Nobel Prize-winner Paul Krugman say is essential to create a full recovery. … The deficit has caused a call for severe austerity measures which have already become part of the economics policies of countries from Greece to the U.K. to Japan. Job cuts in the U.S. will not be restricted to the federal level. …
6. China economy slows
A slowdown in the Chinese economy is usually seen as a cause of global commodity price inflation, but the effects cut two ways. China’s appetite for energy and raw materials may fall. But, the demand for goods and services by its very large and growing middle class drops as well. … Without vibrant consumer spending in China, American companies will suffer.
Unemployment creates two immediate problems. People without jobs drastically curtail their spending, which will ultimately affect GDP growth. The second is the need for tens of billions of dollars every year in government aid to keep the unemployed from becoming destitute. That support has increased deficits and the domino effect is that cash-strapped governments need to make more spending cuts. It may be the biggest challenge the economy faces. …
8. Debt ceiling
The United States debt ceiling, currently at $14.294 trillion, will probably be raised before the government has to cut back essential services on Aug. 2. … The first by-product of debt reduction, or at least a slowdown in its growth, is a combination of higher taxes and a lower level of government services. …
9. Access to credit
The lack of access to credit has hurt the economic activity of both individuals and small businesses. …
Housing is considered by many economists to be the single largest drag on the American economy, and the housing market has gotten much worse in the last two months. …
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Misheck Bunyira carries his wife Janet, in the late stages of pregnancy, to hospital by wheelbarrow in Epworth, Harare, Wednesday, Dec. 17, 2008. Zimbabwe’s health system, once the envy of of many African nations, is in a state of collapse. (Photo credit: Tsvangirayi Mukwazhi / AP)
America’s Decline: Wealth Gap Resembles Third World (July 27, 2011)
Economy Crawling from Hole (April 2, 2011)
Strongest Job Gain in Three Years (April 2, 2010)
U.S. Economy in Depression? (March 3, 2009)
Bumpy ride on the stock market (NBC News, Aug. 4, 2011) – Time-lapse of the Dow Jones industrial average as it drops during the trading day and ultimately closes down more than 500 points. (00:30)
Reuters and The Asssociated Press via MSNBC.com
August 4, 2011
NEW YORK — Any way you cut it, it was a terrible day for the stock markets.
Worries about the state of the economy in the U.S. and around the world slammed stocks on Thursday, driving the Dow Jones industrial average to close down more than 500 points. It was the Dow’s worst drop since October 2008.
The Dow and the S&P 500 shed more than 4 percent; the Nasdaq more than 5 percent. All three major indexes are down more than 10 percent from their previous highs, putting them into correction territory. In addition, all three indexes have erased their gains for the year. …
In terms of lost treasure, the day’s drop slashed (on paper) about $800 billion, as measured by the Wilshire 5000 Total Market Index. The Wilshire has lost about $1.9 trillion in the last nine days.
The Dow Jones industrial average was down 512.46 points, or 4.31 percent, at 11,383.98. The Standard & Poor’s 500 Index fell 60.21 points, or 4.78 percent, at 1,200.13. The Nasdaq Composite Index lost 136.68 points, or 5.08 percent, at 2,556.39. …
The market’s recent malaise stems from a number of factors. U.S. economic data has worsened, suggesting slowing growth from already sluggish pace in the first half. Europe’s sovereign debt crisis has defied remedies and threatens to engulf large euro-zone economies Spain and Italy.
April 25, 2012
LONDON – Britain’s economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron’s embattled coalition government.
The Office for National Statistics said Britain’s gross domestic product fell 0.2 percent in the first quarter of 2012 after contracting by 0.3 percent at the end of 2011, confounding forecasts for 0.1 percent growth.
The last time Britain suffered a double-dip recession was in 1975.
Most economists had expected Britain’s $2.4 trillion economy to eke out modest growth in the early 2012, but these forecasts were upset by the biggest fall in construction output in three years coupled with anemic service sector growth and a fall in industrial output. …
Britain’s economy contracted by 7.1 percent during its 2008-2009 recession and recovery since has been slow, with headwinds from the eurozone debt crisis, government spending cuts, high inflation and a damaged banking sector. …
FROM THE ARCHIVES
One Year Ago — July 31, 2010
One year ago today, I reported that July 2010, with 63 dead, became the deadliest month of the then nearly 9-year-old Afghanistan war for U.S. forces, surpassing the previous record of 60, set in in June 2010.
Two Years Ago — July 31, 2009
Two years ago today, on July 31, 2009, I reported that bombs exploded near five Shiite mosques in Baghdad, killing at least 29 people.
Three Years Ago — July 31 2008
Three years ago today, on July 31, 2008 — the 17th day of my 2008 campaign against incumbent U.S. Rep. Michele Bachmann for the Republican nomination in Minnesota’s 6th Congressional District — I took Bachmann to task for talking almost exclusively about energy issues such as the price of gasoline in her reelection campaign, while ignoring important national security concerns.
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