WORLD> America
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WORLD> America
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Vanishing jobs, stressed consumers feed downturn
(Agencies)
Updated: 2008-11-07 15:12 Companies are begging for help, too. The leaders of General Motors, Ford and Chrysler and the president of the United Auto Workers union came to Capitol Hill to discuss billions of dollars more in financial help.
Reeling from layoffs and watching their wealth shrink as home values and nest eggs have been clobbered, shoppers turned extra frugal last month and sent sales at many retailers down sharply. Michael P. Niemira, chief economist at the International Council of Shopping Centers, summed up the situation as "awful." According to the ICSC-Goldman Sachs index, sales fell 1 percent, the weakest October performance since at least 1969 when the index began. Target Corp. and Costco were among the many retailers reporting sales declines last month. Even teens stayed away from malls. American Eagle Outfitters Inc. and Abercrombie & Fitch Co. reported drops in sales. But Wal-Mart Stores Inc., the world's largest retailer, logged a sales gain as shoppers hunted for bargains. The Federal Reserve ratcheted down interest rates last week to 1 percent and left the door open to further reductions in a bid to prevent a drawn out recession in the United States. The country's economic state has rapidly deteriorated in just a few months. The economy contracted at a 0.3 percent pace in the July-September quarter, signaling the onset of a likely recession. It was the worst showing since 2001 recession, and reflected a massive pullback by consumers. As US consumers watch jobs disappear, they'll probably retrench even further. That's why analysts predict the economy is still shrinking in the current October-December quarter and will contract further in the first quarter of next year. All that more than fulfills a classic definition of a recession: two straight quarters of contracting economic activity. |
