'We are in a recession'

By Abid Aslam
Updated Mar 19, 2008, 02:55 pm

Are U.S. economic woes deepening?

WASHINGTON - New government data and business surveys show the world’s biggest economy falling into—and possibly already in—recession.

Investors fearful of a U.S. slump have driven down European and Asian stocks even as financial institutions there have admitted to large losses from bad bets on U.S. mortgages. The International Monetary Fund and others have warned that no region will prove immune to the spreading pain.

U.S. construction spending in January suffered its steepest fall in 14 years, the Commerce Department said on March 3. A decline in residential building has spread to hotels, highways, and infrastructure projects paid for by state and municipal governments.

Separately, a benchmark survey showed U.S. factory output in February shrank for the second time in three months. The Institute for Supply Management, which released the manufacturing data March 3, caused a stir in February when it found that activity in the services sector, which has long eclipsed manufacturing as an employer, had fallen for the first time in nearly five years.
The institute said its survey of manufacturing activity fell to 48.3 percent from 50.7 percent in January and 48.4 percent in December. Anything below 50 percent reflects declining activity. The non-manufacturing figure had fallen to 44.6 percent in January, the first contraction since March 2003.

Economic data no longer are needed to tell us a recession has arrived, said Warren Buffet, the iconic businessman and investment oracle.

“From a common-sense standpoint right now, we’re in a recession,” Mr. Buffett told the CNBC television channel.

Common folk might agree. Separate surveys recently released—one by Reuters and the University of Michigan, the other by the Conference Board business research organization—found consumer sentiment at historic lows.

“The consumer confidence index continues losing ground and, with the exception of the Iraqi War in 2003, is now at its lowest level in nearly 15 years,” said Lynn Franco, director of consumer research at the Conference Board.

“With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase.”

Consumer spending also has stalled. It rose more than expected in January, the Commerce Department said, but inflation ate up the gain and any benefit it might have had for the economy.
When adjusted for rising costs, especially of food and fuel, consumer spending—which generates two-thirds of U.S. economic activity—stayed flat for the second consecutive month.
The latest findings come on top of earlier reports showing that employers have cut back on new hiring.

The economy barely expanded in the final three months of last year. At 0.6 percent, economic growth fell behind the 0.9 percent rate of population increase. Many economists have said they expect worse—and possibly negative—results for the first quarter of 2008. By one rule of thumb, the country is said to be in a recession if economic activity shrinks for six consecutive months.
To prop up the sagging economy, the Federal Reserve has repeatedly cut a key interest rate since last September. In January, the central bank slashed rates by 1.25 percentage points in just eight days. Its chairman, Ben Bernanke, has signaled a further reduction later this month.
Additionally, Congress and the George W. Bush administration have launched a $168 billion bid to stimulate consumer and business spending.

Economists have warned that stagflation—a stagnant economy beset by high inflation—is imminent. Mr. Bernanke, however, has said he expects prices to reach a plateau.
Business economists, meanwhile, worry about mortgage defaults and heavy debt, which they described on March 3 as the greatest risks to the economy. Inflation ranks a distant third among members of the National Association for Business Economics (NABE).

“NABE members are increasingly concerned over the short-term risks associated with subprime mortgages and other forms of indebtedness, while they continue to cast a wary eye on inflation,” said Ellen Hughes-Cromwick, the association’s president.

The National Bureau of Economic Research usually designates periods of recession. Economists generally defer to the private organization although it tends to lag behind others in declaring ongoing recessions.

The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” GDP refers to gross domestic product, a common measure of economic output. (IPS/GIN)

Economic Gangsters by Mumia Abu-Jamal

Economic Gangsters
[col. writ. 1/19/08] (c) '08 Mumia Abu-Jamal

As Americans begin to taste the bitter dregs of recession; the economy spirals to the top of primary election rhetoric. Briefly displacing the issue of Iraq.

Both Republicans and Democrats join in rare bipartisan agreement on an economic stimulus package -- a government dole out of roughly $800 per taxpayer -- which, when received, will be spent, and this spending will stimulate, or boost, the lagging economy.

I don't want to be a downer, but I feel compelled to say, if the economy can be sparked by so modest a boost, are the problems really that serious, or are they far more serious than politicians are letting on?

It seems to me that politicians are skirting the obvious: U.S. economic problems aren't displacing problems in Iraq: in fact, Iraq -- its costs in blood and treasure -- are driving this period of economic instability, recession and job losses.

How? Well, while the defense industries, and related businesses of oil and mercenary-type outfits (like Blackwater) are making big bucks, this wealth is narrowly distributed. In past wars, workers were driven into factories to build the weapons of World Wars I and II, and so money was widely circulated, particularly among Blacks, newly arrived from the segregated South, or among women, who entered factories to work machines vacated by millions of white men who were Drafted to man the war front (remember Rosie the Riveter?)

This new so-called volunteer army is largely the product of an economic draft, of poor and working class youth hoping to get a leg up in the rat race of attending increasingly unaffordable colleges.

While this hope and dream is often unrequited, what are the economic prospects of tens of thousands of men and women who return legless, armless-- or mindless -- after repeated tours in Iraq?

And the Iraq war, which will cost perhaps upwards of trillions of dollars before all is said and done, is really designed to economically benefit few -- again, oil companies and their subsidiaries. And, of course, petroleum-based fossil fuels have their own ecological, and social costs - that we've not even begun to tally.

While Bush and the Saudi princes do their sword-dance (ironic given the $20 billion Saudi-U..S. weapons deal Bush brings), the economy - and the ecology -burns.

Housing foreclosures are spiking; manufacturing flees to China; gas prices rise; neighborhoods decline into hellholes for survival; and schools resemble training camps for prison.

And prison? Perhaps they are America's lone growth industry.

Wars are poor replacements for ailing economies. For they produce nothing, but pain, loss and ultimately -- more war.

This war, started by neo con nitwits and the Texas/Bush Mafia, has produced pain, loss and death on an epic scale.

No politician now running has the barest notion of how to end the cycle -- for they too are trapped in an imperial web, spun by big business.

They promise no solution, just an extension of the same, elsewhere.

--(c) '08 maj