Yes America, We are in a Recession
Bad economy news is good for Barry O's election hopes but, really, that takes a backseat to the fact that bad times are ahead.Consumer spending, which makes up over 3/4th's (!) of the US economy, dropped 3.1% in the third quarter of 2008. This is the largest quarter-over-quarter drop since 1980, when President Jimmy Carter restricted bank's ability to give loans. Given that the old joke is "Americans will buy anything," such news is quite bad. Since America's economy has been driven less and less by exports since the turn of the 20th century, the fact that consumer spending dropped almost 4 percentage points (it had been growing by about 1.2% per quarter) is a solid indicator that we are in a recession. (By definition, economic growth needs to recede for two straight quarters for a "recession", we'll have to wait until January for those numbers.)
Less spending by consumers means less money for businesses. Less revenue for business owners means they need fewer workers. Those with jobs will receive smaller paychecks since fewer labor hours are needed, and those without jobs will have an increasingly difficult time finding jobs. Since people are being paid less, they will spend less, furthering the cycle. All of this happens while the federal government continues to spend, spend, spend and print more money, driving up inflation. Tucked into the end of the article linked to at the beginning was this gem:
"government spending expanded at a 5.8 percent annual pace. Military spending surged at an 18.1 percent annual rate, and federal spending over all jumped at a 13.8 percent annual clip."
This basic tenet is something that most politicians fail to grasp. The only person I have heard speak about reigning in federal spending and defense spending is Ron Paul, who was laughed out of the GOP primaries and is largely derided by the mainstream as being some sort of fringe, "isolationist" lunatic. One way the economy can turn around is the federal government stops spending money, which they pay for by simply printing more money, driving up inflation rates and weakening our dollar. The federal government also needs to stop spending money on the Defense as if it was World War II, which it is not.
America is a lot safer with a strong economy, an educated and employed work force, and a strong dollar. Continued increases in military spending and continued federal spending will continue to hurt America.
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