from the spring and summer, and was the highest number since September 2001. The financial services industry has been cutting jobs since last summer, when the credit crisis started. By some estimates, 300,000 jobs will disappear from banks and other financial services companies. Just a few months ago, these were considered "safe" white collar jobs.
Up until now, it was unclear as to whether or not the country had formally entered a recession. Now it seems clear. One technical definition of a recession is two consecutive quarters of shrinking Gross Domestic Product. GDP, the main measure of a country's economic health, shrank by 0.3 percent in the July-September quarter, the worst since the same period in 2001. That marks a steep decline when compared to the 2.8 percent growth in the April-June quarter. Most economists predict an even steeper decline in the 4th quarter. In the words of Brian Bethune, economist at IHS global Insight: "The train went off the tracks." And in the words of Robert Macintosh, chief economist at Eaton Vance Corp in Boston: "Pretty grim. It means we're in a recession, it's as simple as that ... a pretty solid manufacturing recession. The question is, 'How long or deep is it going to be?'"
Manufacturing, the backbone of any industrialized economy, has also taken a dramatic hit. The Institute for Supply Management's measure of manufacturing activity plummeted to 38.9 in October, down from 43.5 in September. Anything below 50 indicates contraction. Again, this was the lowest reading since September, 2001. Only this time it wasn't a terrorist attack that pushed an already weak economy over the edge, as was the case 7 years ago. This time it is the direct result of a profound crisis of the capitalist system itself.
Consumer spending, which accounts for 70 percent of economic activity in the country, has now run out of gas. Much of this spending was based on unprecedented levels of indebtedness and mortgages based on rising house prices, and this borrowed money must now be paid back - with interest. Americans' disposable income fell by 8.7 percent in the third quarter, the largest since records began back in 1947. U.S. consumers have now cut back on spending by 3.1 percent in the third quarter, the first decline in 7 years and the biggest fall in 28 years. The Conference Board has said that the consumer confidence index fell to 38 in October, down from 61.4 in September. This is the steepest drop since 1973 and the lowest level for the index since they began tracking consumer sentiment in 1967. To put things into perspective, a year ago, the index stood at 95.2. Today it's at 38.
Businesses have cut back on spending as well. Homebuilders slashed spending by 19.1 percent, the 11th straight quarterly cutback, and business spending on equipment and software was cut by 5.5, the most since the first quarter of 2002. The global economic crisis has also meant fewer orders for goods produced in the U.S. New export orders fell to their lowest level since records began in 1988, ending 70 consecutive months of growth. Auto sales plunged to near 25-year lows in October, with General Motors Corp sales falling by an incredible 45 percent. And here is an incredible figure: The U.S. steel industry has 29 blast furnaces, which supply steel to many key sectors of the economy. Now 17 - over half - of these are going to be shut down. This will mean even more closures and layoffs throughout the economy.
And now the Federal Reserve has cut interest rates again, which will encourage even more borrowing, more spending beyond individuals' and companies' means, and therefore lead to even higher inflation. Gas prices may have fallen since the summer, but the damage has already been done. One company alone, Exxon-Mobil, pocketed $40 billion in profits last year alone. That's just one company. That's billions of dollars working people don't have for food, health care, education, and so on.
And then, after being told for years
that there's no money for our schools, for health care, for jobs, or
to rebuild the Gulf Coast and the coun