Worst Spending Slump Since 1942

WORST SPENDING SLUMP SINCE 1942

www.bloomberg.com

Dec. 10 (Bloomberg) -- The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.

Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harbor, according to the median estimate of 51 economists surveyed Dec. 4 through Dec. 9. By the middle of next year, the economy will have shrunk for a record four consecutive quarters, the survey showed.

“That sounds scary enough to me,” said Jeffrey Frankel, an economics professor at Harvard University and a member of the group that determined the start of the recession. “Consumers have carried the weight of expanding demand for a long time at the expense of a serious deterioration of their balance sheets.”

A drop in spending has brought the auto industry to the brink of collapse, and mounting unemployment, a lack of credit, and falling property and stock values will prompt Americans to turn even more frugal. President-elect Barack Obama has pledged to pursue the biggest public-works plan since the 1950s to stem the already year-old economic slump.

“It’s a serious recession, and there’s a good chance it will break the 16-month record since the Depression,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “We’re at the stage where the weakness is feeding on itself. The next few mo

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[edit on 11-12-2008 by rikk7111]

I believe the worst is yet to come, I don't know about you , but my spending this year has been an all time low. With so many lay-offs and a lack of spending, company's are yet to see the final impact of This Christmas season. The news media pumps up the potential consumers, saying everything is fine and that all is well, but anyone that is savvy to the money market will tell you not all is well in this fairy tale story. How bad will it be, who knows, but one thing is for sure..............We have not seen bottom yet!

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