An article in Bloomberg says the U.S. may be headed for its worst recession since World War II. The article quotes a chief economist at Moody's who says "almost all businesses are in survival mode."
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.
"Almost all businesses are in survival mode, and they're slashing payrolls and investments just to conserve cash," Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview yesterday. "We're in store for some big job losses."
The economy lost over 500,000 jobs in November and there seem to be new layoff announcements from big companies almost daily. The latest layoffs come from AT&T, which is slashing 12,000 jobs.
The recession is already been going on for 12 months and is the longest since a slump in the early 80s.
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.
Some are ready to use the "D" word which seems premature. Dow Jones quotes former secretary of labor Robert Reich as saying we are trending in that direction.
"Today's employment report begs the question of whether the meltdown we're experiencing should be called a Depression," Robert Reich, former secretary of labor and professor at the University of California at Berkeley, wrote on his blog Friday. "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."
Long deep recession or depression it is going to be uncomfortable for many either way. Hopefully, we will not get anywhere near one in four Americans being out of work.
