"On Wednesday, the S&P/CaseShiller home price index confirmed that 5-year long housing crash was still gaining pace. Home prices have fallen to their lowest level in 8 years with no end in sight. Meanwhile the Chicago Manufacturing Gauge recorded its biggest decline in 2.5 years while factory orders dropped in April by the most since May, 2010. There was also bad news on the unemployment front where privately-owned businesses hired only 38,000 workers from April to May, nearly 100,000 less jobs than analysts had predicted. Also, consumer confidence fell to its lowest reading in six months.
So, housing, manufacturing, unemployment and consumer confidence are all down, down, down and down.
Friday's unemployment report was also worse than expected. The Bureau of Labor Statistics (BLS) reported that unemployment rose to 9.1 percent
So, no new jobs are being created and the economy is quickly decelerating. It's all bad.
Consumers aren't spending, businesses aren't investing, and credit is not expanding. At the same time, state and federal governments are trimming budgets and laying off workers. So, all the main players are cutting, cutting, cutting. Naturally, the economy has responded in kind; housing prices are falling, unemployment is rising, manufacturing is stalling and consumer confidence is dropping.
There's nothing here that should surprise us. We are headed into a Depression because policymakers have made another Depression unavoidable. A policy-driven Depression is different than a financial crisis. It is a matter of choice." - Mike Whitney
We should have learned from the last Depression, and Hoover's initial attempts to balance the budget to correct it that austerity isn't the way to go. Of course, when economic history is re-written to conform to an ideology, then nothing can be learned from it.
Retired Monk - "Ideology is a disease".