On the South Lawn of the White House on December 5, 2008, U.S. President George W. Bush Friday acknowledged for the first time that the U.S. economy was in recession.
“Today’s job data reflects the fact that our economy is in a recession,” Bush said hours after the Labor Department reported that the unemployment rate rose to 6.7 percent in November, the highest level in 15 years.
“This is in large part because of severe problems in our housing, credit, and financial markets, which have resulted in significant job losses.”
There’s no doubt that history will judge rather harshly Mr. Bush for his handling of the one of the worst financial crisis in 80 years. Since the start of the recession in December 2007, the economy has lost 1.9 million jobs, lifting the number of Americans out of work to 2.7 million. At 6.7 percent, the jobless rate has now risen 2.3 percentage points since it bottomed in March 2007.
Most sectors of the economy are now losing jobs, including manufacturing, construction, financial firms, retailers, and the leisure and hospitality industries. Only government, education and health services managed to post job gains.
A record one in 10 American homeowners with a mortgage were either in foreclosure or at least a month behind on their payments at the end of September, according the latest survey released Friday by the Mortgage Bankers Association. The percentage of auto loans that was behind by 60 days or more rose 15.9 percent in the third quarter compared to last year, according to credit reporting agency TransUnion.
As consumers struggle to keep up with existing debts, lenders have cut credit card limits and tightened up on extending new loans, which has further crimped spending. The collapse of the stock market has wiped out trillions of dollars of personal wealth, forcing consumers to try to increase savings to make up for those losses.
All of which is accelerating the pullback in consumer spending – the main engine of the U.S. economy that accounts for roughly two-thirds of gross domestic product. Consumption dropped 3.7 percent in the third quarter and expectation is that consumer spending will drop by 4.7% in the end of the fourth quarter.
So what action steps can as leaders of our respective companies take to address the current financial meltdown?
Read my next article on “Steps Spa Owners Should Take in RecessionaryTimes.”
Michael Carter President and Chief Executive Officer of Athena of Nashville Inc
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