We are in a Recession. Are We Headed for a Depression?

Today on Morning Joe, Mark Haynes, pointed out why we are in a recession (stock market down 20% from highs, 400,000 applications for unemployment insurance). When do we start worrying? When have the candidates mentioned the crisis? Or even used the word, crisis? What is the Congress doing? Forget Bush. He don't care. Wake up, folks.

Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy’s fragile state. The unemployment rate held steady at 5.5 percent.

The latest snapshot of business conditions, released by the Labor Department on Thursday, showed continued caution on the part of employers who are chafing under high energy prices and are uncertain about how long the economy will be stuck in a sluggish mode, reflecting fallout from housing, credit and financial troubles.

Heavy job losses in construction, manufacturing and financial services, along with cutbacks in retailing, eclipsed job gains in education and health services, leisure and hospitality, and government.

[...]The jobless rate spiked to 5.5 percent in May. That marked the biggest over-the-month increase in two decades and left the rate at its highest since October 2004.

Job losses in both April and May turned out to be considerably deeper than had been thought. Payrolls dropped by 67,000 in April, versus the 28,000 previously reported. And, losses in May came to 62,000, rather than the 49,000 initially estimated.

So far this year, the economy has lost a total of 438,00 jobs, an average of 73,000 a month.

But the crisis isn't limited to the United States, eventhough it began here. We need a global consensus on what to do. We have to stop the collapse of the U.S dollar. And, of course, something has to be done about oil prices. Why isn't the government(s) doing something about runaway prices?

Global stocks fell Thursday as the price of oil rose above $145 a barrel for the first time.

Investors were unwilling to make major bets as they awaited an interest rate decision from the European Central Bank and an important employment report from the United States.

“Rising oil prices aren’t good for anyone,” said Steven Vanneste, an economist at Fortis in Brussels. “In addition to the higher energy costs that businesses face, employees are going to be asking for wage increases, which will double the cost burden on companies.”

U.S. crude oil futures for August delivery rose $1.80 to $145.37, beating the record of $144.57 a barrel set Wednesday in New York.

The situation in Japan is particularly disconcerting:

Japan's key stock index extended its sell-off to an 11th straight session Thursday — its longest slide in 54 years.

[...]The Nikkei has lost more than eight percent of its value over the 11-day fall, which is the longest losing streak since the index stumbled for 15 straight trading days starting April 28, 1954.

Retail Sales in January Worst in Almost 40 Years

This is disastrous news. Something needs to be done now before it's too late:

Consumer spending slowed to a crawl in January, with retail sales at major chains rising just 0.5% in what was by one measure the month's worst performance in nearly 40 years, according to reports released Thursday.

Evidence of consumer caution came from both ends of the marketplace.

Discounter Wal-Mart Stores Inc. said shoppers held on tight to the gift cards they received over the holidays or used them to buy milk and bread rather than toys or iPods. High-end Saks Inc. said customers shifted more of their spending to "promotional events" -- making purchases when items were specially priced.

Wal-Mart's sales were higher this January than last, though just barely, while Saks saw a 4.1% increase. Sales at Macy's Inc. stores fell so much more than expected -- by 7.1% -- that the company slashed its quarterly profit forecast and also said that as part of a restructuring plan it would eliminate 2,300 jobs. Costco Wholesale Corp., on the other hand, recorded a 7% hike.

There were widely divergent numbers for individual chains but disappointment for the industry as a whole.

The International Council of Shopping Centers, which tallied 43 retail chains, said sales at stores open for at least one year were the worst since it started keeping track in 1969.

The reason for the terrible retail sales is consumer confidence:

People's confidence in the economy sank even lower amid heightened fears about shrinking job opportunities and the possibility the country is falling into recession.

According to the RBC Cash Index, confidence dropped to a mark of 48.5 in early February, from 56.3 last month. The new reading was the worst since the index began in 2002 and surpassed the previous low reached in January.

The continued erosion in confidence comes despite the fact that Federal Reserve Chairman Ben Bernanke has gotten much more forceful in cutting interest rates to induce people to buy more and bolster the economy. The Fed slashed interest rates twice over the span of just eight days in January—its most aggressive rate reductions in two decades.

[...] Still, an increasing number of economists worry that the rescue efforts by the Fed and the politicians may not be enough to avert the first nationwide recession since 2001. Some economists believe the economy has already toppled into a recession.