Economic Downturn?

The economic forecast isn’t good, and it seems that those that live in the other Amerika (those that are not juggling bills because their paychecks have shrunk, are not cutting back on healthy foods to make your money last the week, not going to the dentist because you don’t have dental coverage and the cost is outrageous, etc.), are just starting to realize that, mostly because they look to reports rather than reality.

The weakest holiday shopping season in five years ended dismally for most retailers, whose sales tumbled despite deep discounts and extended store hours, stoking fears that the economy is tipping into a recession.

Sales fell across the board, knocking down once seemingly invincible chains like Target (down 5 percent compared with last year); Abercrombie & Fitch (2 percent); Nordstrom (4 percent); and Kohl’s (11.4 percent).

“It shows that the U.S. economy absolutely tanked in December,” said Ellen Zentner, United States macroeconomist at Bank of Tokyo-Mitsubishi in New York. “Consumer spending drives the economy. What we’re left with is no evidence of any kind of consumer momentum going into 2008.”

But, let’s not just look at retail spending. let’s take a look at the Fed. Bernake is talking more rate cuts.

Presenting a bleak picture of a deteriorating national economy, Ben S. Bernanke, chairman of the Federal Reserve, strongly suggested on Thursday that the Fed would cut interest rates soon, perhaps by a large amount.

“The outlook for real activity in 2008 has worsened,” Mr. Bernanke said after describing all the forces dragging down the economy. “We stand ready to take substantive additional actions as needed to support growth and to provide adequate insurance against downside risks.”

Now, I realize the term “recession” is described in some convoluted way – were several factors must occur during a several month period for our economy to be considered in a recession. But, that also negates the reality people live on a day to day basis. If you look to the people, they have been living in a recession for years under this administration, particularly when the employment growth bar was placed so low, and job cuts in well-paying sectors bled out our economy (employment being part of the recession equation). People kept spending, but that spending was lopsided. In previous holiday spending reports, it was the high-end stores that were posting gains, while lower-end retail stores were the big losers.

So, it’s no wonder I’m looking at these reports and saying “what the fuck took you economists so long to realize the reality?”