Let's look at the news
As we close out 2008 and embark on our journey through 2009 we need to evaluate what has been and where we are headed. A look at some recent economic news – while not positive – the knowledge may help us through our journey. We know for a fact that this is the worst economic crisis to hit our country since the Great Depression and could perhaps be even worse. We are all in a survival mode and to survive we need the facts.
The New York Times on January 14th reported, in an article written by Jack Healy, “Stocks Tumble on Retail Sales Slump”. Here are some excerpts from this article.
The government reported on Wednesday that retail sales fell for a sixth consecutive month in December…..
Sales at department stores, restaurants, gas stations and a host of other retail businesses fell 2.7 percent last month — nearly double what economists had been expecting — and were 9.8 percent lower than sales last December, the Commerce Department reported.
The new retail numbers offered an epitaph for what economists and retailers called the worst holiday shopping season in decades:…
The article said consumers have “holstered” their credit cards implying that many prudently withheld purchases. I believe the truth of the matter is that the credit card companies “holstered” their credit by freezing, lowering or closing consumer accounts of the average consumer. However, there are those that still do have cash purchasing power that did prudently withhold purchasing.
“People hunkered down pretty dramatically,” said John Silvia, chief economist at Wachovia. “Yes, everybody celebrated the holidays, but there was far less spending than in prior years.”
Consumer spending, which accounts for more than two-thirds of the economy, has slowed sharply since mid-September as the problems on Wall Street began to spread. With the uncertainty of jobs weighing on consumers, economists do not expect a turnaround anytime soon.
If “more then two-thirds of the economy” is in consumer spending then it appears that the economists not expecting a turnaround anytime soon is accurate. This being the case then we all need to prepare for the long haul. It is going to be a rough ride.
The Fed’s beige book, a regular survey of businesses around the country that was released Wednesday, indicated that the economic slump worsened in December.
“Overall economic activity continued to weaken across almost all of the Federal Reserve districts since the previous reporting period.” the report added.
And the months ahead will be difficult……
It is a valid warning to all of us. This is the reality of our current economic crisis. With so many other factors involved – it is prudent to be aware.
Links to other business headlines in the New
Rescue of Banks Hints at Nationalization
Stocks Fall Again After a Hopeful Start
Prices Rose Just 0.1 Percent Last Year
Citigroup Reports Big Loss and a Breakup Plan
By ERIC DASH - New York TimesPublished: January 16, 2009
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