Friday, January 4, 2008

US Recession Confirmed - Unemployment Surges

I've been posting for some time about my concerns around the US economy. Specifically, the threat of imminent recession and all that means. Today, the numbers we've been dreading appeared - documenting a recent surge in unemployment. Read the NY Times article here, and the Financial Times piece here. The ominous rise in unemployment was accompanied by a related decrease in job creation. No surprise there. But that's only part of the picture.

The economy is tanking at the worst possible moment for most Americans. Why? Because personal debt has been soaring due to agressive, unrealistic and predatory campaigns by banks and lending institutions. That's right, banks are preying on their customers in their frenzy to feed on our debt. According to Dr. Carolyn Baker (source):

Average household credit card debt has increased 167% between 1990 and 2004. The average American had over seven payment cards in their wallet including credit card, retail store cards, and bank debit cards in 2004. The average interest rate paid on credit cards was approximately 14.54% in 2005. The rate of personal savings in the U.S. has dipped below 0% for the first time since the Great Depression, hitting negative .5% in 2005.

Read UMass Econ professor Rick Wolff's analysis of the situation here. And of course, don't forget that this meltdown is concurrent with the Sub-Prime loan meltdown. Another example of predatory business practices that I've posted about here, and here. Add to that scenario the costs of continuing wars (see real-time war cost calculator on the right sidebar), the imminent financial challenges in Social Security and Medicare and the picture becomes bleak. Will someone please tell me this is a bad dream. The only thing worse would be if the price of oil and basic foodstuffs like cereal shot up. Whoops, already happened. It's starting to look like a flash flood in a narrow canyon.

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