EconomicCrisis.US

The plunge in the U.S. economy in 2008 and 2009 became an irresistible opportunity to pronounce the failure of the form of capitalism that emerged at the end of the 20th century. “One had expected competition and abundance for everyone, but instead one got scarcity, the triumph of profit-oriented thinking, speculation and dumping,” said Nicolas Sarkozy, the president of France. The current crisis, he noted with a certain pleasure, signaled the end of the “illusion of public impotence” and the “return of the state.”

There was ample reason for such grave-dancing. Between July 1, 2008, and June 30, 2009, total U.S. economic output, adjusted for inflation, dropped at an annual rate of 3.8 percent—the worst 12-month decline since 1946. The unemployment rate, which started 2008 at 5 percent, had doubled by the fall of 2010. The number of jobs fell for 21 months in a row, and by May 2010 the median unemployed worker had been out of work for 23 weeks—compared with 10 weeks in the depths of the 1973-75 recession.
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Federal Reserve Bank of Chicago President Charles Evans said Tuesday the economic recovery is “extremely modest” but he believes it’s unlikely the economy will fall into a double-dip recession.

The pace of recovery from the worst economic meltdown since the Great Depression is “slower than we had hoped for,” said Evans. He acknowledged that although the risk of a double dip is higher than it was six months ago, it is “not the most likely outcome.”

Recent economic figures point to a faltering economy, including surprisingly weak housing data, released after Evans’ remarks Tuesday to the Indianapolis Neighborhood Housing Partnership.
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“This sucker’s going down.” That was George Bush’s pithy description of the US economy when the financial crisis in the autumn of 2008 threatened to bring down every bank on Wall Street.

Concerted international co-operation of a sort never seen before averted disaster that winter and by the middle of last year the world’s biggest economy seemed to be on the mend. American factories started to hum again, shares rallied sharply and growth resumed. The US was showing its traditional resilience when faced with adversity and all was right with the world.
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The U.S. Federal Reserve was being closely watched Tuesday for its latest take on where the American economy is headed.

The central bank’s policy-making group, the Federal Open Market Committee, was due to release its latest statement on monetary policy at 2:15 p.m. ET.

Markets were indicated to open lower, ahead of the announcement.

U.S. futures pointed to a negative start to the trading day as the Dow Jones industrial futures backed off 91 points, or 0.9 per cent, to 10,575 at 9 a.m. ET. The Nasdaq futures dropped 17 points, or 0.9 per cent, to 1,896.75 while the S&P 500 futures were down 11.2 points, or one per cent, to 1,114.4.
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