A free falling object is an object that is falling under the sole influence of gravity. No one knows where the object will land. A free falling economy is undefined but appears to be an economy that is collapsing. No one knows where it will end. Jobs are disappearing, businesses are closing, and the only purchasing is for necessities of life. Those necessities are water, food, and power for cooking and heat.
Happily most of us are not in that stage now but we seem to be going that way. The government is functioning poorly at best, jobs are difficult to find, and businesses are closing. These are all the facts that brought us the Great Depression.
Of course no one in our government and no one in the media want to use the word “depression.” The mere suggestion of “depression” might start the population to believe it can happen again.
“Double dip, here we come,” said Colin Barr in Fortune.com.
The private sector should be the engine of hiring, but it’s holding back because of “scant demand,” said Phil Izzo in The Wall Street Journal.
“Let’s face it”, said David Leonhardt in The New York Times: The “old consumer economy is gone, and it’s not coming back.”
One big difference this time is the lack of government hiring, which tends to “blunt the bleeding of the private sector” during downturns, said Morgan Housel in TheMotleyFool.com. Since 2010, the public sector has cut nearly half a million jobs, particularly at the state and local levels, because of “plunging tax receipts.” Add those job losses to the steep declines in manufacturing, construction, and retail, and you can see why “most respected economists don’t see employment hitting pre-recession levels until 2014 at the earliest.”
The Federal Open Market Committee of the Federal Reserve issued a statement yesterday that read in part:
To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
I never shopped in Tourneau in Westfield Topanga but it was a very large store.
Does anyone believe this economy will recover before 2013? Write your explanation here.
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