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-- October 29, 2001
Last year, many areas of the country enjoyed an economic boom. Many showed robust growth throughout the year -- or at least for the first nine months of the year. But this year, it's a whole different story.
The economy appears to be in the first stages of recession. And, contrary to what most pundits have been saying, we are convinced that this recession will last longer than just two quarters.
That's because nearly every economic indicator is bruised and battered. The unemployment rate has skyrocketed in the past year -- and will likely zoom higher in the months ahead. Layoffs have pinched consumers, and sales of major items such as houses, clothes, and cars have weakened recently. With consumers accounting for two-thirds of GDP, it's not surprising that the economy is contracting.
Plus, businesses have stopped spending. Companies are trying desperately to cut costs -- which is why they've laid off so many employees -- but they still can't seem to increase their profit margins. Employment costs, such as insurance, have increased. At the same time, prices have fallen for many goods (such as computers, clothes, and cell phones) making it harder for companies to turn a profit.
This economy will continue to wallow in recession until concrete signs of a rebound begin to emerge -- in the form of increased consumer spending and positive, growing corporate earnings. So far, we haven't seen any evidence that this is happening.
America In A Slowdown