The unfortunate and tragic terrorist attack on September 11th has not altered our opinion of the US economy’s fate. For many months, the US economy has been in a downward spiral. The Fed’s beige book report released today confirms that the economy continued to decline in August and early September. The only thing that has changed is that the downward spiral may accelerate in the wake of this tragic event.
The reason: already faltering consumer spending will virtually dry up. We talked extensively about the shakiness of consumer spending in prior weeks. Heretofore, consumer spending had been the last umbrella protecting the economy from a disastrous storm. Now, Americans will undoubtedly start saving their pennies for the many rainy days yet to come. And many will be forced to rein in spending because of layoffs and cutbacks.
Thousands of workers are facing job cuts from the airline industry and other industries. The unemployment rate had already unexpectedly skyrocketed to 4.9% last month – these latest layoffs will push that number much higher.
The economy will sink further in the coming months -- into recession and perhaps into a depression. You should be doing everything you can to safeguard your family’s wealth now.