Evidence of a recession piles higher with new data

Evidence of a recession piled ever higher Friday, with new figures showing Americans are spending less and gloomy about the economy, while the government signaled it won’t buy stock in the financing arms of auto companies to prop them up. The Commerce Department reported consumer spending dropped a sharp 0.3 percent in September while their incomes, the fuel for future spending, managed only a small 0.2 percent gain.

By MARTIN CRUTSINGER, AP Economics Writer

That followed a report a day earlier that the U.S. economy shrank by 0.3 percent in the third quarter. The accepted definition of a recession is two straight quarters of a shrinking economy.

Closing out the worst October in 21 years but one of the best weeks ever, investors did some bargain shopping on Wall Street, snapping up stocks that have plunged in value. The Dow Jones industrial average gained nearly 145 points.

Wall street broker Michael Kilkenny works the  trading floor ... 
Wall street broker Michael Kilkenny works the trading floor of the New York Stock Exchange shortly after the market opened Tuesday, Oct.28, 2008 (AP Photo/David Karp)

Meanwhile, the outgoing Bush administration sent signals to automakers and other industries hoping for government purchases of their stock that they probably won’t qualify for the program.

Administration officials, who spoke on condition of anonymity because the program is still being put together, said it was unlikely the auto companies would be able to qualify for direct government purchases of stock in their auto-financing arms as part of the $250 billion stock purchase program.

They could still be eligible for government purchases of bad assets, such as auto loans, under a separate program that is expected to spend $100 billion initially. The government plans to buy stock in banks and lift bad assets on their books as part of the financial system bailout.

The wrangling over the broader rescue program continued, with Democrats stressing Congress wants the package to be used to pump new loans into the economy, not diverted to stockholders or executives or to buy other banks.

“I am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed,” said House Financial Services Committee Chairman Barney Frank, D-Mass. He announced hearings on the rescue package Nov. 12 and 18.

Read the rest:
http://news.yahoo.com/s/ap/20081101/ap_on_bi_go_ec_fi/financial_
meltdown;_ylt=AuQ4x5cBIgpi2w42kt0KBHas0NUE

Advertisements

One Response to “Evidence of a recession piles higher with new data”

  1. Lynn Says:

    I don’t think we need new evidence to tell us that we are in a recession. Unfortunately I am afraid our recession is only going to get a lot worse as we move into the holiday season. I believe that retailers are going to be very dissapointed in their sales with so many people struggling to keep their jobs and their homes Christmas presents will be one of the first things to go.
    With the Bush administration comments that the auto industry will probably not qualify for part of the government bailout there will be more unemployed people on the streets very soon.
    I also think after year end earnings reports come out there will be many industries that are going to report flat to declining profits. The normal after math to declining corporate profits has been that we see more employee layoffs. More layoffs will serve to deepen our recession in 2009.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: