US Recession May Be Worst Since World War II

Bloomberg News reports that the massive job losses in the U.S. last month signal the nation may be headed towards its worst recession since World War II:

The U.S. economy may be headed for its deepest and longest recession since World War II as mounting job losses take their toll on consumer confidence and spending.

Employers cut payrolls last month at the fastest pace in 34 years as the unemployment rate rose to 6.7 percent, the highest level since 1993. The 533,000 drop brought cumulative job losses this year to 1.91 million, the Labor Department said yesterday in Washington...

...At 12 months, the recession is already the longest since the 16-month slump that ended in November 1982. The recession is the 11th since a downturn that occurred in 1945, the year that World War II ended.

To fight the downturn, Federal Reserve Chairman Ben S. Bernanke this week outlined unorthodox policy action that officials can take beyond lowering interest rates. One option would be to purchase longer-term Treasuries on the open market to inject more cash into the financial system.

The central bank may also cut its benchmark rate from 1 percent at its meeting Dec. 15-16 in Washington. HSBC Holdings Inc. economists yesterday forecast the Fed will reduce it to zero, emulating the Bank of Japan's efforts to defeat deflation earlier this decade.

Former Labor Secretary Robert Reich is even more pessimistic. Mr. Reich asks if we should simply call our current situation a Depression:

Today's employment report, showing that employers cut 533,000 jobs in November, 320,000 in October, and 403,000 in September -- for a total of over 1.2 million over the last three months -- begs the question of whether the meltdown we're experiencing should be called a Depression.

We are falling off a cliff. To put these numbers into some perspective, the November losses alone are the worst in 34 years. A significant percentage of Americans are now jobless or underemployed -- far higher than the official rate of 6.7 percent. Simply in order to keep up with population growth, employment needs to increase by 125,000 jobs per month...

...When FDR took office in 1933, one out of four American workers was jobless. We're not there yet, but we're trending in that direction.

Comments

[womanagainstpalin]

My 401k has lost over 20% of its value in the last few months. Depressing

At least I'm making a few bucks selling Hard Times tshirts http://www.cafepress.com/against_palin/6255231

[themodernleader]

Free Trade always works for the exporter. Protectionism in some manufacturing and technological sectors is simply common prudence. Also, the "free trade" of modern America is actually mercantelism with the U. S. as the colony shipping the raw resources and receiving the manufacturing goods.

[Montanagramma]

In watching the stock market, the thing that really angers me, is that when a company announces huge layoffs, that company's stock soars. I know that profitability is increased with less employees, but when I see that happen, my thoughts go to the people who have been laid off to insure more profits for those who still have enough funds to stay in stocks. Depression is coming soon, to a neighborhood near you (if on the off chance it is not already here).

The real unemploymet rate is now reported to be at 12.5% when those who no longer receive benefits are included. I have read that a couple years after the 1929 crash, it was at 8.9%. If that is true, we are really falling faster that the Great Depression.

[kd1s]

If anyone recalls, the Federal Reserve was established to prevent such economic recessions and depressions. They've failed miserably if only because what we were sold was a bill of goods.

The reality is that the Federal Reserve is the exclusive domain of its member banks. Imagine that.

[loki]

We're a nation of everyone for themselves. From DC and business to the single family entity. Wives and husbands leaving each other because they want something different for themselves without considering the families well being as a whole. Politicians ,well, that is self explanatory. They are the biggest whores .
And Business does nothing for the betterment of the country.
What do we have, at least 10 million adults out of work right now? So what would happen if they could get together and put aside personal self interest for the greater good of all? What if 10 million people came marching with arms locked into Washington DC one day, and just removed all the idiots from congress, tossed Bush and all of this Aholes out of the white house, the Pentagon, the CIA, the FBI, the Justice Department , department of Ag and so on. Telling them that they are all fired unless they can start to do things for America as a whole. Forget taking care of the good old boys on wall street, forget taking care of themselves first. Do something that will help us all.

Ok, my fantasy is over. I know, you cant get more than 3 Americans at one time to converge and actually do anything that isnt for selfish reasons anymore. Not like the good old days when I was in school and people would walk out and protest and get results. Now , America is every person for themselves, damn the rest!

[berrycooda]

The Government should DEMAND that all military equipment and military supplies
be made in America.

Put the mills back to work. They did it during WW2 ...why not now.
Also, start the American Bridge Co. up again and start making what we need for bridge repairs.

STOP IMPORTING CHEAP STEEL...
Let the government help people start a business that will stay in America and employ Americans.
Quit letting so many TECH people come to America and take jobs. Microsoft complained that they didn't get enough tech people out of the 40,000 that were imported this year.
That is the same as outsourcing work to other countries.

Any company that moves to another country shouldn't find it cheaper to bring goods back in
then it is to make them in America.
Same with the auto mfg. They don't make cars here anymore. They just import parts and then
assemble most of them here.
Some of the big 3 want to back away from obligations made years ago.
GM is expanding in China and building a plant in Russia. So what does that tell you.

[FDRJFKLBJ]

protectionism never works.

[loki]

Only one thing wrong with the military demanding everything made in the USA.
The USA suppliers would rape the USA gov blind.

[SCHenrich]

want to know how bad the housing market has gotten? This bad:

http://thedailyoracle.com/index.php/real-estate-watch-by-a-house-get-a-free-car

Get a free Mercedes when you buy this house....

[Pearlswan]

Its a recession when we have to cut back spending in order to pay our expenses. Its a depression when we are forced to accept cut backs in revenue so our earnings are not enough to pay our expenses. Depression forces us to borrow to meet expenses. We dig ourselves deeper into debt when we borrow. The national economy holds us all underwater because collectively we owe more than we earn. Therefore, we are in a depression. A depression is an economic hole. The first rule of holes is to stop digging. Yet the gov't. keeps printing money to bail out the financial industry without insisting that they create any new jobs or industries with the bail out money so that the hole gets dug even deeper. Additionally, the economic hole gets deeper with every new foreclosure and every job lost. Therefore, it is a depression that grows deeper with every lost home and every lost job. In a recession, everyone stagnates. In a depression, everyone sinks. The foreclosures and job losses create a huge national sinkhole that sucks the entire economy down into it. We need to stop printing money, end the foreclosures and start producing jobs again. Without jobs and homes we have no firm foundation to support our national economy. Therefore, we all sink deeper into depression together. The economic sink hole could evolve into an economic black hole if we fail to act wisely now.

[Girl28]

Interesting post. It's all about job creation in this country. Also, I've always wondered if it was the arm loans that really started getting people into trouble, why don't the banks let everyone renegotiate to a fixed rate loan? I mean only for customers who have been making their mortgage payments on time every month. How does it help the banks having all of these foreclosures on their books? It doesn't.

[Lupin77]

Don't think we've fallen off the cliff nor are we near it. Think the works program is a good start towards correcting the economic mess but what started it all the foreclosures still need to be addressed. The 700B was suposed to address this issue but it has been forgotten by Paulson et al. It needs to be fixed otherwise the economic slum will continue.

[FDRJFKLBJ]

the government can create jobs, but it can't create wealth.

the government doesn't make money, it only takes money. the funding for these projects will be a burden on the economy; taking money from productive sources to pork road and bridge building.

[HoraceOvidson]

There was a way out of the Great Depression. It was called World War II. In the '30s the government intervention into the economy with efforts like the WPA helped, but did not perform a cure. The war required such a massive effort that nearly everybody had to work, and women were brought into the economy in droves. Now that was a jump start! Bush has achieved an unexpected double: recession in a time of war. So, it's not war that gonna get us out of this economic mess. We have a surplus of labor. And we link income to doing work. One would expect that as machines do more, and are more and more productive, people could relax, and work less. But this is looked down upon. We want people to work. We want the "welfare mother" to work a minimum wage job, and leave her child at home alone, because the most important thing is TO WORK. Work. Work. Work-- even though there is no good work. And then people don't have the money, to spend to make the economy hum. Tapped out. Obama is talking about creating lots of jobs. That is great. And maybe there are enough worthwhile things to do to put everybody to work. But maybe not. With high productivity, and setting up rules, whereby places outside the U.S. do the work to provide the products we consume, maybe, just maybe, we will have to examine our attitudes and mores towards work.

[themodernleader]

This recession will become a depression, then a hyper-inflation choatic hotbed of massive unemployment and hopelessness.
We better prepare so the above forecast can not come to pass. Otherwise, the finger writes and all our tears can not wash out a word of it.

[Carolab]

WAKE UP!!! http://whiskeyandgunpowder.com/backfield-in-motion-at-the-fed/

Then go here: http://www.breakthebailout.com

DO IT NOW--there is deadline today!

[bacaja]

A better term fpr our curremt econic state might be "A repression" because that's what it
is.

[FDRJFKLBJ]

how about "A decline-re­cession-de­pression-s­elloff"

stop with the crazy words. just call it what it is - a depression.

[womanagainstpalin]

During the Depression there was over 30% unemployment. We're not there yet.

[marijam]

...it would make far more sense, however, to offer hiring loans - as Mr Obama proposed during the campaign.

...to eliminate this demand deficit as quickly as possible, the Bush tax cuts on top earners should be repealed right away, freeing money for more effective use...

...economic justice

[marijam]

Why Wait to Repeal Tax Cuts for the Rich? by Robert H Frank. New York Times today.
"In a nutshell, the claim is that low tax rates for top earners prompt small businesses to create jobs....business owners will hire new workers whenever they can afford to do so. What matters however, is not whether owners can afford to hire, but whether hiring will increase their profits.
If the goods produced by additional workers can be sold for at least enough to cover their salaries, hiring makes economic sense, no matter how poor a business owner might be. But if additional workers won't produce enough to cover their salaries, hiring is a losing move, even for the richest owners. The after-tax personal incomes of business owners are irrelevant in hiring decisions."