Many states appear to be in recession

April 25, 2008
Many states appear to be in recession

The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes.

The situation looks even worse for the fiscal year that begins July 1 in most states.

"Whether or not the national economy is in recession — a subject of ongoing debate — is almost beside the point for some states," said the report to be released Friday by the National Conference of State Legislatures.

Poor get Poorer as Recession Looms

April 31, 2008
Poor get Poorer as Recession Looms

WASHINGTON (Reuters) - The gap between rich and poor in many states has broadened at a quickening pace since the last U.S. recession, which could make it difficult for low-income families to weather the current economic downturn, according to a report issued Wednesday.

Since the late 1990's average incomes have declined 2.5 percent for families on the bottom fifth of the country's economic ladder, while incomes have increased 9.1 percent for families on the top fifth, said the report from the liberal-leaning Center on Budget and Policy Priorities and Economic Policy Institute.

Recession is a given. Can we avoid depression

March 24, 2008

Recession is a given. Can we avoid depression

When economist Robert Parks predicted early last week that there was more than a 60 percent probability the current financial meltdown in the United States would lead to the "Bush depression," his phone began ringing like crazy with calls from the media.

Mr. Parks, however, doubts the cuts will do much to boost the economy. Rather, he sees a further steep fall in housing prices, continued major deficits in the federal budget and in the international trade balance, a tumbling dollar, and a weak stock market leading to a genuine depression with 30 to 35 percent unemployment, greater poverty, more loss of homes, plunging bond and stock prices, even some starvation. Parks, now a Pace University finance professor (for years he was chief economist at three Wall Street firms), says he has never predicted a depression before. His e-mail to press acquaintances sparked a lot of interest, as Parks was daring to express publicly the financial community's worst nightmare.

Most Economists Say Recession Has Arrived

March 13, 2008
Most Economists Say Recession Has Arrived

The U.S. has finally slid into recession, according to the majority of economists in the latest Wall Street Journal economic-forecasting survey, a view that was reinforced by new data showing a sharp drop in retail sales last month.

"The evidence is now beyond a reasonable doubt," said Scott Anderson of Wells Fargo & Co., who was among the 71% of 51 respondents to say that the economy is now in a recession.

Surging costs of groceries hit home

March 9, 2008
Surging costs of groceries hit home

American families, already pinched by soaring energy costs, are taking another big hit to household budgets as food prices increase at the fastest rate since 1990.

After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.

Dangerous Cracks Appearing in Job Market

March 8, 2008
Dangerous Cracks Appearing in Job Market

Dangerous cracks in the nation's job market are deepening. Employers slashed jobs by the largest amount in five years and hundreds of thousands of people dropped out of the labor force — ominous signs that the country is falling toward a recession or has already toppled into one.

For the second straight month, nervous employers got rid of jobs nationwide. In February, they sliced payrolls by 63,000, even deeper than the 22,000 cut in January, the Labor Department reported Friday.

Fed's Poole says U.S. recession likely

February 11, 2008
Fed's Poole says U.S. recession likely

ST. LOUIS (Reuters) - The U.S. appears likely to avoid an economic slowdown but the chances of a recession have risen, St. Louis Federal Reserve Bank President William Poole said on Monday.

"I think the best bet is that we will not have a recession," he said in response to questions after a speech to the St. Louis chapter of the National Association for Business Economics.

U.S. recession to be longer than usual

February 9, 2008
U.S. recession to be longer than usual

NEW YORK, Feb 8 (Reuters) - The U.S. economy has entered a recession that will be more painful and drawn out than the usual downturn, the director of the Reuters/University of Michigan consumer sentiment survey said on Friday.

Inflation pressures will linger despite the retrenchment in consumer spending, complicating the task of policy-makers, the University's Richard Curtin said in a report, citing data from the Reuters/University of Michigan Surveys of Consumers.

"This is no ordinary recession," he said. "The aftereffects will last much longer than the typical downturn."

In Private, Bernanke Says First Six Months Of This Year Will Be "Bad"

January 22, 2008
In Private, Bernanke Says First Six Months Of This Year Will Be "Bad"

We're told by those who've heard him that he says the first six months of this year will be "bad," an adjective that some interpret this as signaling there is better than a 50-50 chance for a recession. Even worse, the former Princeton prof believes the ensuing recovery will be "weak" because of persistent problems in the housing market that will result in subdued consumer spending. We checked in with his office, which says it doesn't comment on what the boss says in private. But it's certainly not comforting news considering that his recent public testimony was a bummer, like when he told Congress last week, "Recently, incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and that the downside risks to growth have become more pronounced ... in particular, a number of factors, including continuing increases in energy prices, lower equity prices, and softening home values, seem likely to weigh on consumer spending as we move into 2008."

Economic Good Times Were Mostly a Mirage

January 23, 2008
Economic Good Times Were Mostly a Mirage

The great moderation now seems to have depended — in part — on a huge speculative bubble, first in stocks and then real estate, that hid the economy's rough edges. Everyone from first-time home buyers to Wall Street chief executives made bets they did not fully understand, and then spent money as if those bets couldn't go bad. For the past 16 years, American consumers have increased their overall spending every single quarter, which is almost twice as long as any previous streak.

Now, some worry, comes the payback. Martin Feldstein, the éminence grise of Republican economists, says he is concerned that the economy "could slip into a recession and that the recession could be a long, deep, severe one." In Monday's Democratic presidential debate, Barack Obama made the same argument: "We could be sliding into an extraordinary recession," he said.

Bernanke presses the panic button

January 22, 2008
Bernanke presses the panic button

Given the clear connection between Tuesday's rate cut and global market turmoil, it is hard to avoid at least one conclusion. Bernanke has proven, once and for all, that juicing the stock market is now considered Job No. 1 for the Federal Reserve Bank. The material effects of rate cuts do not show up in economic growth statistics for months or even years after their enactment. By making an emergency "inter-meeting" cut a mere eight days before its regularly scheduled meeting,
Bernanke is conducting economic policy in order to appease market psychology. The fragile psyches of Wall Street traders who played such a pivotal role in creating this mess by romping through the derivatives wonderland, are now in control of government strategy.

How bad can it get? Economist Nouriel Roubini, who has been preaching doom for years, declares that the oncoming "recession will be ugly, deep and severe, much more severe than the mild 8-month recessions in 1990-91 and 2001." Dean Baker, co-director of the Center for Economic and Policy Research, observes that the housing bust "is creating the largest financial crisis since the Great Depression and might well lead to the most serious recession since World War II."

Greenspan sees US in or near recession

January 15, 2008
Greenspan sees US in or near recession

NEW YORK: The US economy is probably in a recession or about to slide into it, former US Federal Reserve Chairman Alan Greenspan said in an interview with The Wall Street Journal.

The odds are "not overwhelming but they are marginally in that direction" Greenspan was quoted as saying in the interview, published on Tuesday. "The symptoms are clearly there. Recessions don't happen smoothly.

No Quick Fix to Downturn

January 13, 2008
No Quick Fix to Downturn

As leaders in Washington turn their attention to efforts to avert a looming downturn, many economists suggest that it may already be too late to change the course of the economy over the first half of the year, if not longer.

With a wave of negative signs gathering force, economists, policy makers and investors are debating just how much the economy could be damaged in 2008. Huge and complex, the American economy has in recent years been aided by a global web of finance so elaborate that no one seems capable of fully comprehending it. That makes it all but impossible to predict how much the economy can be expected to fall before it stabilizes.

Americans Cut Back Sharply on Spending

January 14, 2008
Americans Cut Back Sharply on Spending

Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.

The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.

Merrill Lynch: Recession 'has arrived'

January 8, 2008
Merrill Lynch: Recession 'has arrived'

The feared recession in the US economy has already arrived, according to a report from Merrill Lynch.

It said that Friday's employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.

Its view is controversial, with banks such as Lehman Brothers disagreeing.

Manufacturing Shrinks Most Since 2003

January 2, 2008
Manufacturing Shrinks Most Since 2003

Jan. 2 (Bloomberg) -- Manufacturing in the U.S. shrank the most last month in almost five years, triggering speculation that the Federal Reserve will cut interest rates by half a percentage point to stave off a recession.

The Institute for Supply Management's factory index fell to 47.7, from 50.8 the prior month, the Tempe, Arizona-based group said today. The figure was lower than forecast by any economist surveyed by Bloomberg News. Fifty is the dividing line between contraction and expansion.

Can the Economy Handle $100 Oil?

January 2, 2008
Can the Economy Handle $100 Oil?

"Add it up and you have a wildly bullish day," says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. "Fresh capital is charging back into the market and looking to buy." The question now: whether the faltering U.S. economy can avoid a recession in an environment of $100 oil. That's because the price of crude oil has knock-on effects throughout the economy (BusinessWeek, 10/29/07), from the price of gasoline to stock market valuation (BusinessWeek.com, 1/2/08). The worry is that consumer spending, which accounts for two-thirds of the U.S. economy, will suffer as prices rise, tipping the economy into a further slowdown or recession.

The Economy and the New Year

January 2, 2008
The Economy and the New Year

When Mr. Bush says the economy is strong, he is generally referring to rising wages, low unemployment and what he calls healthy economic growth. But wages have either fallen or failed to outpace inflation during most of his tenure. Job creation is now slowing from a pace that has long been subpar. Economic growth is also braking, if not contracting. In any event, growth during the Bush years has not been healthy; rather, it has been abnormally lopsided. Corporate profits have soared (until recently) and the rich have become richer, while most Americans have treaded water or lost ground, their troubling circumstances masked by an unprecedented borrowing binge, now exacting its toll.

U.S. economy to contract in coming month

May 17, 2007
U.S. economy to contract in coming month

NEW YORK (AP) - A gauge of future economic activity showed the U.S. economy will slow in coming months, reversing recent gains and suggesting higher gas prices and a sluggish construction industry are beginning to take their toll.

The Conference Board said Thursday its index of leading economic indicators dropped 0.5 per cent, higher than the 0.1 decline analysts were expecting. The reading is designed to forecast economic activity over the next three to six months.