Today the Bureau of Labor Statistics reported that 159,000 jobs were loss. The last time the employment rate slipped by that much (in 2003) the country was climbing out of the recession of 2001.
The word recession has been swirling in the air for more than a year now. The employment rate is slipping, the credit markets are frozen and wage growth is decreasing. Isn’t that proof enough?
Not exactly. A recession occurs when the gross domestic product contracts for two straight quarters. That has yet to happen. The GDP increased at an annual rate of 2.8% in the second quarter of 2008 and by 0.9% in the first, according to estimates from the bureau of economic analysis. When the next GDP reading occurs on October 30, at the end of this third quarter the nation will get an inkling of what’s to come.
The $700 billion bailout signed by President Bush into law today is supposed to stave off a recession. The theory is that once banks can write off their bad loans with taxpayer financed cash, they will begin to extend credit to consumers to shop for the holidays and to businesses that need to buy materials to make the products. But many people aren’t entirely sure that the rescue plan will pull us out of the quick sand.
What if consumer confidence is too low? What will happen if banks continue to lower credit limits on credit cards so that even if already over extended consumers want to shop, they can’t?
As long as the word recession stays on air as a part of the 10 pm or 11 pm news; employers continue to slash their payroll and decrease their manufacturing schedule; and the price of milk continues to be a hefty percentage of one’s hourly wage, then America just might find that the rumor of a recession has become reality.
Marcia A. Wade is the interactive reporter of BlackEnterprise.com.