January 14, 2008
David Uren in The Australian acknowledges the reality of what is happening in the US economy:
The fallout from the financial economy into the general economy is becoming more intense. Foreclosures are forcing housing sales into a falling market. There is no longer demand for housing from people without good credit histories. The tightening of finance is also starting to spill into the commercial property industry, where developers are finding it harder to obtain or roll over debt. The fall in housing prices and now the fall in shares are eroding household wealth. The American consumer, who keeps the great flywheel of the US economy spinning, is pulling back.
Have rising exports, due to to the weak dollar, helped the US to avoid slipping into recession, despite the decline of the US manufacturing base? Paul Krugman argued so on his blog late last year. He is now having second thoughts. As US imports continue to rise the US trade deficit continues to increase.
Despite rising unemployment, slowing economic growth, declining consumers confidence, inflationary pressures a deepening housing crisis (rising foreclosures and falling house prices) and a panicky stockmarket, the Bush administration is saying that economic fundamentals are sound. No wonder the Democratic presidential candidates are attacking the Republicans on the economy and bringing forward multi billion economic packages involving relief and stimulus measures.
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Gary
I heard on Radio National this morning that the state of Michigan has lost 400,000 jobs, with another 50,000 expected. The problem is Detroit, and the faltering US auto industry. Michigan is a rustbelt, with high unemployment and big housing foreclosures. Those jobs are gone and they are not coming back.
These are not the signs of a healthy economy.