Picture of an Economy Collapsing

Graph of Quarterly Change in GDP

The graphic above shows the dramatic drop in annualized GDP quarterly growth for the fourth quarter of last year. Two other points  are well demonstrated in this data: (To read the balance of this article, follow this Link.

Unemployment Gets Worse in Every State

The Bureau of Labor Statistics provided the data for the chart below.

In a sea of bad news, the water just got a little deeper, as every state in the United States reported a month over month and year over year rise in their unemployment numbers.

It is not surprising that the agricultural states in the center of the country have the lowest levels of unemployment, since so much of farm labor is supplied by the families that own the farm.  The industrial states are suffering the most, as they are most dependent on factory employment.  But, even the service industries are hurting, as California, Florida and Nevada, three states that have large service industry composition, all show unemployment of 10% or higher.

Bailed-out Banks Keep Senior Executives

A report from the Associated Press today discloses that nine out of ten banks that got bailout funds have kept their senior management in place.  In other words: "The same executives who were at the controls as the banking system nearly collapsed are the ones the government is counting on to help save it."

The regular employees of these banks have not been so lucky.  The same report details how there have been about 100,000 job cuts in the banking industry since the failures began.  Unfortunately, the job cuts are coming from the ranks, not from the top. 

The taxpayers, too, are not getting a fair deal for the billions they are handing over to the failed banks.  We will have no say or right to questions decisions by the same executives who misguided their corporations to bankruptcy.

In another report, the high-flying execs at Citibank caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France.  The decision came 24 hours after the banking giant, which was rescued by a $45 billion taxpayer bailout, defended buying the state-of-the-art Dassault Falcon 7-X U.S. skies -- as a smart business deal.

To see the pictures of the Falcom 7-X and read the balance of the blog, click here.

Asia Takes a Hit

From the looks of the chart below, don’t talk of decoupling in Taiwan. In a country where almost 50% of GDP comes from exports, the world wide recession is having a devastating effect. With exports down 40% from last year, Taiwan is suffering a 20% drop in GDP if last month’s losses are annualized.

Compare this with an expected GDP drop in Germany or America of from 1-2% and you see how the losses in their major markets translate in a multiplier effect of around 10 times in Taiwan. They are not decoupled with America and Western Europe. They depend on demand from these regions to fuel their internal employment and growth.

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Pictures of a Global Recession

The graphic below, supplied by the New York Times, provides a strong image of how the global recession is affecting countries around the world. For December of ’08, the three largest exporters in the world , China ($105.7 billion), the U.S. ($98.1 billion), and Germany ($96.1 billion) all showed losses from December of ’07. China slowed 3% in December and 2% in November. The U.S. slowed 4% from a year year, and Germany dropped 21%.

To see the graphics of these and other nation's export performance, click here.

Economic Outlook for 2009

Predictions for the American economy are all over the map. The most optimistic prediction I see calls for the first half of 2009 to continue its decline, with unemployment reaching 7-8% by the end of June. Recovery will begin in the second half, and the economy will end the year with a net growth of 1% to 1.5%.

A less optimistic outlook sees the decline continuing until the third or fourth quarter of the year, with net growth for the year as at or near zero and unemployment reaching as much as 8% to 9%, with even 10% a possibility.

The most pessimistic projections see the recession lasting through the entire year, with the highest level of unemployment reaching from 10% to 12%. A few of the pessimistic school see an even more protracted downturn, lasting as long as to 2011. This group sees negative growth for all of 2009 and even through 2010 in some cases.

Breadline in N.Y. in 1930

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