That’s the statement from the Associated Press on the state of our economy. The failing economy is in a tailspin, each problem contributing the problem. It’s the whole “when one domino falls” thing. The falling stock market, the disappointing Christmas retail season and record setting unemployment together all mean that fewer Americans have money to spend. Those that have jobs have drastically cut back on their spending; Not good for retailers, leading to further economic slowdown and job cuts. More Americans are saving, but that is not what the economy needs at this time.
The Senate has approved Obama’s stimulus plan, and it includes increasing benefits and extending the time allowed for benefits to unemployed workers. There’s talk of providing the unemployed with health benefits, such as Medicaid, or subsidising insurance for those individuals. The unemployment rate is currently 7.9%, and that number is certain to go higher. Dozens of big names (GM, Microsoft, Pfizer) have announced layoffs as consumers are cutting back spending to only include necessities. Unemployment will rise, dollars in circulation will shrink, the stock market will fall some more, and then more companies will announce layoffs. See the dilemma? Leading many economists to make this prediction:
“…the worst is yet to come.”