The broadest index, the S&P 500, which includes 500 large corporations, fell almost 5%. The technology-heavy NASDAQ fell even more, dropping almost 6%. This was the biggest one-day drop since the COVID-19 hit the United States in 2020.

What set off the stock market sell-off was President Trump’s announcement of tariff increases the day before, which Trump named “Liberation Day.” Trump announced a minimum 10% tariff for almost all countries, and much higher tariffs for countries where the United States had large trade deficits. While Trump claimed that they were “reciprocal tariffs,” that is, based on other country’s tariffs, in fact they were calculated based on the U.S. trade deficit with each country.

These tariffs were piled on top of Trump’s previous tariffs. So, for example, China will now face the 20% tariffs from February plus 34% additional tariffs, for a total of 54% tariffs. This means that for every good that comes into the United State from China the importer will have to pay a fee equal to 54% of the price of the good. Trump’s 25% tariffs on imported cars also kicked in.

While Trump believes that the exporter pays the tariff, in most cases, the consumer will bear the brunt of the cost of the tariff through higher prices.

Even worse for the consumer, goods made in the United States that compete with imports will also go up in price. This is what happened during Trump’s first term, when he placed tariffs on iron and steel. While import prices went up 25%, domestic steel producers raised their prices on average 22%, preferring to make a quick buck than increasing production.

Trump also believes that higher priced imports will cause there to be more production in the United States. But his tariffs on iron and steel, and coming tariffs on imported car parts, increase the cost of production of goods using the tariffed goods. So, while there were small increases in production of iron and steel, leading to more jobs, the losses in industries using iron and aluminum for production were far greater, leading to an overall job loss.

This is even greater with Trump’s tariffs on imported automobiles. Over the last 30 years the auto industry has built plants across Canada, Mexico and the United States based on the no-tariff rules of NAFTA and now the USMCA [United States-Mexico-Canada Agreement] that Trump himself negotiated. But rather than moving plants to the United States, which would take billions of dollars and years of construction time, auto makers have started to shut down plants in Canada and Mexico on the belief that their cars cannot be sold with the 25% tariff. But parts for these plants are often made in the United States, so they can be shut down too. This is the case with Stellantis, which suspended production at plants in Canada and Mexico, leading to layoffs at their part plant here in the United States.

Another issue is that of retaliation and the costs to American workers and farmers. In Trump’s first term, he only tariffed about half of imports from China, but China’s retaliation by cutting off purchases of U.S. farm goods, especially soybeans, led the Trump administration to spend more than $20 billion on aid to farmers. This time, with Trump putting tariffs on virtually the whole world, the retaliation will be much greater and the cost in terms of lost business sales and workers’ jobs, will be much greater.

One of the impacts of Trump’s trade war is growing uncertainty among businesspeople, who are holding off hiring and investment decisions given the escalating trade war. For this reason, even mainstream economists are raising their estimates of the likelihood of a recession in the United States later this year. Factoring the damage to the economy caused by retaliation, the job cuts of federal workers, as well as terminating government contracts, it is more likely than not there will be a recession.

How bad could it get? Trump has threatened additional tariffs on semiconductors, pharmaceutical drugs, copper, timber and lumber, and more. He has also threatened more tariffs on countries that retaliate, countries that buy oil from Venezuela, countries that tax digital services by U.S. companies, etc. So rather than providing more certainty, “Liberation Day” marks the beginning of even more uncertainty.

With the Trump administration and their minions at DOGE going all out to cut spending, and with Republican majorities in both the House and Senate, it is very unlikely that there will be anything like the massive aid in 2008-2009 and 2020. Without federal spending, it is quite possible for the economy to continue to grind down, in a deep and painful recession.

#SanJoseCA #CA #CapitalismAndEconomy #Tariffs #StockMarket

Behind the drop in the stock markets was the growing realization of the economic costs of Trump’s trade wars and the growing possibility of a recession. The worry is that Trump’s tariffs will lift import prices, causing inflation to go up and production to go down because of higher costs. This so-called “supply-shock” would be a (hopefully) milder version of the COVID-19 pandemic impact in 2020.

On Monday, the Canadian province of Ontario imposed a 25% surcharge on the electricity it exports to the United States in response to Trump’s tariffs. About 1.5 million households and businesses in the states of Michigan, Minnesota and New York use Canadian electricity. The Premier of Ontario also said that they could shut off electricity exports altogether if Trump escalated his trade war on Canada.

The same day, China’s previously announced response to Trump’s tariffs also went into effect. It consisted of 15% tariffs on chicken, wheat and corn and 10% tariffs on soybeans, pork, beer and fruit. China also limited purchases of Chinese goods by 15 U.S. companies and banned ten from doing business in China. These agricultural tariffs are both an attempt to hit back at U.S. farmers, which is one of Trump’s bases of support, and reflect the progress China has made in applying technology including AI, global positioning (what we call GPS, but China has its own system by Baidu), and drones to agriculture.

Further, Trump’s 25% tariffs on aluminum and steel for all countries are scheduled to go into effect on Wednesday. The tariffs on aluminum will hit Canada the hardest, as they are the single largest country exporting aluminum to the United States. In fact, Canada’s exports are about the same as total U.S. production of aluminum. While steel imports are only less than a quarter of total U.S. steel consumption, Canada is still the largest exporter of steel to the United States, with Mexico as number two.

#SanJoseCA #CA #CapitalismAndEconomy #Trump #Tariffs #StockMarket

The S&P Purchasing Managers Index fell in February to 51.6, just above the 50.0 line where the economy is neither growing nor shrinking. The services part of the index actually dropped below 50, to 49.7, showing that the service sector was starting to slow. The “Trump Bump” of economic and financial enthusiasm has ended after just a month in office, as concern rose among businesses about the impact of his tariffs and deportations.

A separate report, on the sale of existing homes by the National Association of Realtors, saw sales fall by almost 5% in January, as compared to December of 2024. Interest rates have been rising. Trump’s proposed tariffs have led to greater expectations of higher inflation. Mortgage interest rates topped 7% in January, making home loans more expensive to pay off. While higher interest rates affect the demand for homes, as Trump’s deportation raids begin to reduce the number of construction workers, the supply of new homes will fall, pushing prices up even more and making them even less affordable.

The University of Michigan’s Consumer Sentiment Index fell almost 10%, to 64.7 in February, down from 71.7 in January. A big part of this was the rise in expected inflation over the next year, from 3.3% in January to 4.3% in February.

The largest outbreak of stagflation in the United States was in 1973 and 1974, when inflation and unemployment rose. Typically, these indicators move in opposite directions. The recession and rising inflation showed the post-World War II economic boom in the United States was over, and that the relative decline of the U.S. economy had begun. Today’s stagflation is a sign that the U.S. economic decline is accelerating. While Trump was largely elected because of widespread dissatisfaction with the economy, especially inflation, in fact, his policies were going to accelerate both the economy’s decline and rising prices.

#SanJoseCA #CA #CapitalismAndEconomy #Inflation #StockMarket

The stock price rout was led by Japan, where stock prices fell 12%, the worst day since “Black Monday” in October 1987, when U.S. stocks fell 22%, the worst one-day fall ever. A particular factor in Japan was that the Japanese central bank raised interest rates last week, causing a sharp jump in the value of the Japanese yen.

Back in the United States, the so-called “magnificent seven” of tech companies, including Alphabet (parent corporation of Google), Amazon, Apple, Meta (parent company of Facebook), Nvidia (maker of chip used in artificial intelligence applications) and Tesla have been leading the stock market higher for months.But on Monday, these stocks fell harder on average, as doubts about the profitability of AI joined with recession fears.

Falling stock prices are not a good predictor of a coming recession – in fact the biggest fall in October 1987 had little impact on the economy. But a sustained fall could affect spending by the wealthiest Americans, who own most stocks. As more and more working-class Americans have been cutting back on purchasing and turning to credit cards for necessities, wealthy Americans have kept up spending.

More worrisome is that many economic signs are pointing towards an economic slowdown that could lead into a recession. Claims for unemployment are on the rise. More and more credit card and car loan borrowers are falling behind on their payments. The manufacturing sector has been shrinking, albeit slowly.

#SanJoseCA #SP500 #S&P500 #Economy #Unemployment #Recession #Stocks #StockMarket #AI

Investors are facing up to the fact that the country’s central bank, the Federal Reserve, is more committed to slowing the economy to lower inflation than it is with propping up stock prices. Inflation has hit a 40-year high of more than 8% the last two months. The Fed has already raised short term interest rates twice, one time by half of a percent for the first time in 20 years.

The Fed has made public plans to begin to sell off its massive stash of bonds. During both the 2008 financial crisis and then the COVID recession in 2020, the Fed bought about $8 trillion in U.S. government and mortgage bonds, to lower short term interest rates to record lows and to reduce mortgage interest rates. The Fed plans to reduce its stash of bonds by almost $100 billion per month or more than $1 trillion per year. This will reduce the amount of money in circulation and in banks and will raise longer term interest rates. The standard 30-year fixed rate mortgage interest rate has gone from 3.11% at the beginning of the year, so 5.27%, a jump of more than 70%.

The Federal Reserve’s inflation fight is raising recession fears on Wall Street. Federal Reserve Chair Jerome Powell has been praising Paul Volker, who headed the Fed from 1979 to 1987. Under Volker, the Fed raised short-term interest rates, currently at 8/10ths of one percent, to a record high of 20% in 1981 to fight recession which had reached 13% just months before. While inflation did fall, the worst (at that time) recession since the Great Depression followed, with unemployment reaching 10.8%, even worse than the recession with the Great Financial Crisis in 2008.

Inflation has been eating at the purchasing power of workers’ wages. Even though hourly pay is up over 5%, with inflation over 8%, the purchasing power of workers’ wages has dropped by 3% over the last year. It is no wonder that there is growing dissatisfaction despite rising wages.

Supply side shortages have played a role in the rise of inflation. The COVID pandemic led to a severe drop in spending on services such as travel. People turned to goods, causing a spike in demand that U.S. factories, many still troubled by COVID, were unable to meet. The demand for imports rose, overwhelming ports and truckers. Then there were shortages of computer chips that restricted new car sales, which are off 20% from the current peak, while prices rise at double-digit levels. The lack of new cars increases the demand for used cars, while supply drops as people keep their cars when they can’t get new one.

The U.S. sanctions on Russia have pushed up oil and gasoline prices. The Biden administration has escalated the U.S. economic sanctions on China, causing shortages of solar panels. These shortages continue to crop up one after another helping to drive prices higher. Another supply side shortage is the drop in the number of new immigrants, which started under the Trump administration.

Demand has played a secondary role. When inflation started to take off a year ago, unemployment was still at 6%. While the massive government spending to prop up the economy played some role, it basically ended at the time inflation started to take off.

Inflation is rising in countries around the world, particularly in Europe, where sanctions on Russia have a greater impact. The U.S. and Europe’s economic war on Russia is pushing up grain and food oil prices, causing hardship in poor and middle-income countries dependent on trade with Russia for their basic foodstuffs.

One country much less affected by inflation is China. While China’s socialist economy no longer has extensive price controls like those in the Soviet Union, inflation has been much less than here, running around 1.5%. China was able to clamp down on COVID and limit deaths to about 15,000 as compared to the 3 million deaths there would have been if China had the same death rate at the United Sates. This meant fewer supply-chain disruptions and no need for the massive financial spending that the U.S. government needed to keep the economy alive. While producer prices are rising at almost the same rate as in the United States, the government can directly (through government-owned enterprises) and indirectly (through influence from state-owned banks and Communist Party committees in enterprises) keep businesses from passing on all the price increases. China also maintains a year or more supplies of raw materials such as metals and grains that can be released to curb production and food costs.

#SanJoséCA #economy #stockMarket

San José, CA – On Friday, April 22, U.S. stocks fell more than 2.5%, with the Dow Jones Industry Average, dropping almost 1000 points. This led to the third week of losses for U.S. stocks, as a combination of recession fears – based on slowing corporate sales and profits, combined with the reality of higher interest rates – influenced investors.

The biggest news this past week was a more than 30% drop in Netflix stock prices on Wednesday following their report of losing 200,000 subscribers, after a prediction of a large gain. But was not highlighted in the news was that Netflix lost 700,000 subscribers after pulling out of Russia as part of the U.S.-orchestrated economic war on Russia.

While the news details economic difficulties in Russia, little is said about the growing costs to the U.S. economy, including higher costs of gasoline. While Russia only provided about 2% of the U.S. oil supply, oil is very price inelastic, meaning that a small change in the quantity can cause a large change in prices. With the elasticity of demand for oil estimated as low as 0.05, a 2% drop in supply caused by U.S. sanctions on Russia could lead to a 40% rise in price. In fact, U.S. oil prices spiked 35% after the start of the war in Ukraine, leading to higher gasoline prices.

Netflix was one of the so-called “pandemic” stocks that rose in 2020 with the widespread stay-at-home orders. The stocks of other businesses such as exercise machine company Peloton, and online videoconferencing company Zoom have also been falling after huge price spikes in 2020. Other businesses whose stocks rose during the rapid expansion in 2021, such as online used car company Carvana and Domino’s Pizza, have also seen their stocks fall and their sales and profits slow.

But a broader range of stocks are being hit by slowing sales and profits. Verizon, the largest cell-phone service provider, was one stock hit by slowing sales and revenue showing an economic slowdown. Other companies, such a for-profit hospital chain HCA, are seeing their profits squeezed by higher cost as inflation spreads through the economy.

The 40-year high in consumer inflation that is now more than 8% is prompting the Federal Reserve to speed up their increases in interest rates. While the Fed only raised short-term interest rates by one-quarter of one percent at their last meeting, longer term interest rates are rising quickly, from 3.5% at the beginning of the year to over 5% now. This will start to slow the red hot housing market, and then new home construction, which is one of the major triggers for a recession.

A fundamental problem with the U.S. economy is that it is showing signs of a broad-based slowdown, or stagnation, which is typical of a monopoly capitalist economy. This slowdown is most clearly seen in the case of Japan, whose economy as grown at a less than 1% rate per year for the last 30 years. The same is true for the eurozone in Europe since the financial crisis almost 15 years ago.

On the other hand, the United States economy has grown much faster than Japan’s or Europe’s, at a 2.5% rate over the last 30 years. But the faster rate of U.S. growth has been held up by lower and lower interest rates. When interest rates are adjusted for inflation, or what economists call the real interest rates, U.S. interest rates have dropped from about 7.5%, to under 1% over the last 40 years.

The U.S. economy has also been supported by growing doses of federal government deficit spending. The total debt of the federal government, as compared to the size of the U.S. economy as measured by Gross Domestic Product, has risen from 30% 40 years ago to more than 120% today.

With both the Federal Reserve pledging to raise interest rates to slow the economy to try to bring down inflation, and the Biden administration now saying that deficit spending needs to fall, a slowdown in the economy is very likely. At the same time, with much of the inflation being caused by supply side-factors, increases in prices are going to continue. This combination of higher unemployment and high inflation, or stagflation, hasn’t been seen since the 1970s.

#SanJoseCA #PeoplesStruggles #stockMarket

To understand what has happened, it is important to start at the beginning for a short lesson in what stocks are. Stocks are slices of a business. Stocks like those of GameStock (a video game and electronics retailer) have been sold on a public market. There are many avenues to buy and sell stocks, and the one that’s most important to understand for this tale is Robinhood. Robinhood is a free app marketed toward regular people who don’t have the funds, the interest, or the time to invest through investment firms, hedge funds, and the like. Like its name implies, RobinHood would have us believe that its mission is to steal from the rich and give to the poor, but, as with all free services, if you’re not paying for a product, you are the product.

Robinhood’s business model includes making interest by lending out funds that users have in their accounts and, more insidiously, routing transactions through Citadel Securities. Citadel Securities makes money off of Robinhood transactions and kicks a portion back to Robinhood. Citadel’s agreement essentially means that Citadel is paying for two advantages.

First, Citadel Securities has the option to be the first entity on the opposite side of any Robinhood transaction. If you want to buy a stock, and it’s currently at a $1, when you hit the button to buy, in the milliseconds it takes to buy that stock, Citadel can buy that stock at $1 and sell it to you at $1.01. In fact, this is its whole reason for making the deal with Robinhood in the first place and is called “payment for order flow.” This means that no matter what you may be making off of stocks through Robinhood, Citadel is making money off of you.

Secondly, Citadel Securities has access to all of the Robinhood data; so, not only can they make money off of selling and buying to Robinhood traders, but they also have competitive advantage by getting Robinhood data first and trading off of it. When Reddit decided to buy GameStop, even if it had been planned completely privately, Citadel’s computers would have seen this sudden uptick in buys and traded based on that info before anyone else. Citadel Securities also makes money on selling information about what trades it has made to external buyers, essentially selling the Robinhood information to additional third parties.

There is another entity that’s important to understand before we put all the pieces together: Melvin Capital. Melvin was one of the primary targets of this Reddit/GameStop scheme because Melvin Capital bet the house on GameStop’s stocks going down. Simply, Melvin borrowed GameStop stock, sold that stock at X price, and promised their lender to give them back the same number of stocks at a future date. They are betting that the price at a later date, Y, will be lower than the price they sold them at earlier, X, meaning that they pocket the difference of Y-X. The issue is that if the price of GameStop stock is higher at the later date, then the profit disappears and actually turns into a debt. Melvin would be forced to buy GameStop stock at a price higher than they sold them at. Being forced to buy a stock at rising prices also has the effect of contributing to the further increase in its price, creating even higher prices. And that’s exactly what happened.

GameStop’s brick-and-mortar business model has been going out of fashion, and betting on it to fail seemed to be a pretty safe bet. Many people and organizations, not just Melvin, were shorting GameStop. Redditor day-traders (as opposed to professional traders) noticed this happening and decided to try and pull one over on the big firms by buying up GameStop stock and forcing the firms to lose their bets on the stock falling.

It’s important to note here that even with the price of GameStop stock skyrocketing, there was no change to its assets or business model. Even since this fiasco, there is no reason to suspect GameStop is substantially more valuable in any tangible sense than it was a week ago. Day-traders investing in GameStop on a lark and increasing the share price doesn’t change the fact that the share price will have to fall to reconcile with GameStop’s weakening business position. The point of this scheme is to keep the price artificially high just long enough to mess with those who were profiting off of GameStop’s demise.

Melvin Capital lost an undisclosed, but likely ten-figure, sum on GameStop. Redditors celebrated a victory over Wall Street, but their celebrations are premature. While they did accomplish a laudable act of uncovering the farce that is the stock market, Wall Street doesn’t lose easily. Robinhood froze trading on GameStop as well as other stocks mentioned on Reddit as potential targets for GameStop Scheme 2.0. Melvin Capital was bailed out with an almost $3 billion dollar cash infusion. Interestingly, $2 billion of that came from Citadel. Citadel is not the same organization as Citadel Securities, but they are both owned by the same person and, functionally, it’s not illogical to view what happened as one company that made money off of the GameStop scheme bailing out another company that lost money off the GameStop scheme – leaving those of us in the audience with the odd feeling that nothing has changed.

That’s the key – that’s what’s important. For all of the discourse about bankrupting Wall Street firms, what is being left out is the fact that these businesses are not like us. When we go bankrupt, we lose everything. When they go bankrupt, nothing changes except maybe the name on the building. Even then, the leaders of bankrupted Wall Street firms glide to safety with their golden parachutes, continue to be employed by the firms that buy out their failed endeavors, or simply use their remaining wealth (or that of their friends) to build a new firm. The same can’t be said for any Robinhood trader who got caught up in the moment and invested more than they should have and now is a bit short on rent. The industry remains consolidated, and the system marches forward in growth-for-growth’s sake until the next bubble bursts and we are left to pick up the pieces.

This moment is a lesson. Everyday people are who suffer when the financial industry leaders do wrong.

Capitalists would have you believe that the stock market ‘is’ our economy, that it’s too complicated for us to understand, but that we should trust it because it works for us. These past few days should show us, clearer than ever, that normal people can – and do – understand the stock market and that it doesn’t have our interests in mind.

Tech bros using financial instruments, even the ones with the best of intentions, will not be what brings Wall Street to its knees – at least not for very long. It will take an organized mass movement of real-life Robin Hoods who aim to take power, while taking down Wall Street and capitalism, forever.

#ChicagoIL #PeoplesStruggles #stockMarket #GameStop #Reddit

Despite some positive economic news on unemployment claims and Gross Domestic Product this past week, the economy still remains in a deep hole. There are still more than 22 million people getting government aid for unemployment, more than 12 times the number before the recession began. GDP remains down 2.9% from a year ago, the second worst on records going back to World War II. Only the bottom of recession and financial panic of 2007-2009 was worse.

The economic road ahead has darkened to the point that Wall Street can no longer look back to the bounce in the economy when pandemic restrictions eased. COVID-19 is back in the news, with almost 100,000 new infections in the last 24 hours, more than the total infections in China where the pandemic began in that (much more populous) country. As the number of new infections go up, hospitalizations and death follow. In the last two weeks infections are up 42%, hospitalization for COVID-19 rose 25%, and deaths went up 16%.

States and cities are ordering businesses to close again in the wake of rising numbers, and more and more hospitals are close to not being able to treat all the COVID-19 patients. While they are trying to have a more targeted approach to business shutdowns than in the spring, it is not sure whether this will work, as the same policy in the U.K. has failed to stop the rising tide of infections. Many Republican local officials are resisting public health measures like wearing masks in the worst-hit areas. Donald Trump, Jr. even complained that COVID-19 deaths are “almost nothing,” as the daily number came close to 1000 that same day.

Another problem is that Republican-led Senate dragged its feet on passing more economic relief for the pandemic and recession. The Senate has not passed a single bill since the CARES Act in March. In contrast, the Democratic-led House of Representatives passed an additional aid package in May, and then another with less aid in October in an attempt to compromise with the Republicans. Republican Senate leader Mitch McConnell has promised to take up more relief next year.

But that will be too late for tens of millions of Americans. December 26 is last day that payments for the federal Pandemic Unemployment Assistance for self-employed and gig workers, and for the federal Pandemic Emergency Unemployment Compensation for those whose regular unemployment aid has run out, usually after six months. Right now there are 14 million people who will lose their aid, more than 60% of the total getting government economic help.

The Center for Disease Control eviction moratorium expires on the first Monday in January. While landlords have been illegally evicting tenants, the moratorium has held back a tsunami of evictions, as there are 30 to 40 million tenants now behind on their rent. The eviction moratorium has not stopped the rising debt that tenants owe landlords for back rent.

Last but not least, state and local governments are continuing to cut spending, which means fewer jobs and/or hours of work for government workers. Many had hoped to get aid from the federal government, which can borrow freely, while state and local governments have to raise taxes or cut spending. In the latest GDP report on the economy from July to September, state and local government spending was the only category that did not bounce back from the big drop during the previous April to June period. These job cuts will hit women workers especially hard as they make up 60% of the state and local government workforce. This recession has already been unusually hard on women workers as compared to other recession where typically male workers in construction and manufacturing are hit the hardest.

#SanJoseCA #PeoplesStruggles #stockMarket

On the same day, the Labor Department released their weekly report on unemployment insurance. While the usual seasonally adjusted measure of new claims for regular state unemployment insurance fell, it was not really comparable to the previous week as the Labor Department had changed how they did seasonal adjustment. Looking at the non-adjusted numbers, there was a small increase in the new claims, about 1%, to 833,000 for the week ending August 29.

In contrast, new claims for the federal Pandemic Unemployment Assistance, or PUA, for contract and gig workers increased by 25% to almost 760,000 from 610,000 the week before. The broadest measure of people receiving unemployment benefits, including the regular state unemployment, the federal PUA, and the federal Pandemic Emergency Unemployment Compensation and other smaller programs, jumped by 2.2 million people to 29.225 million for the week ending August 15.

While the weekly number of new claims for regular state unemployment is down since April, it still higher than any week before the current recession. Further, the increase in the total number of people actually collecting benefits, shows how bad the labor market still is.

#SanJoseCA #PeoplesStruggles #stockMarket

San José, CA – With the additional $600 in unemployment benefits gone along with federal eviction protection, President Trump announced that a deal to restore the benefits and protect renters and home buyers “is not going to happen.” With tens of millions of people getting government aid, tens of thousands of evictions underway, and record numbers of people short on food, Trump’s statement may seem so beyond uncaring as to be almost senseless.

But his opposition to a deal makes sense from the privileged point of view of a man born to wealth who grew up to be a billionaire. The stock market, one of Trump’s favorite measures of the economy, has gained back almost all of its losses from when the recession began and is near record high levels. Big businesses like Amazon are doing great while thousands of small businesses fold up shop. Housing prices are up, as are purchases, while millions don’t know if they can make the rent or pay their mortgages.

And, as always, there are political considerations. If Congress were to make a deal, it would overshadow Trump’s executive orders. While Trump’s orders might help out the economy by about $100 billion, this falls far short of the Republican Senate’s proposed trillion-dollar ($1000 billion) aid package, much less the House Democrats $3.5 trillion HEROES Act. But without a deal, something might look better than nothing. And Trump is dead set against any deal that would help the U.S. Postal Service, thinking that suppressing mail-in votes will help him in the November election.

But for many working people, the economic crisis is going from bad to worse. There are still more than 28 million people getting government aid through regular state unemployment insurance, the federal Pandemic Unemployment Assistance or PUA for gig workers and the self-employed, and the Federal Emergency Unemployment Compensation or FEUC for the long-term unemployed.

The latest report on new applications for state unemployment insurance in the week ending August 8 did fall to 963,000. This is the first time the number has been less than a million since March. But it also still much higher than the previous record high in 2009. As other short-term indicators of employment do not show any improvement in the last few weeks, it is likely that many people are not bothering to file, now that the addition $600 through the Federal Pandemic Unemployment Compensation is gone. The number of people who have run out of the regular state unemployment insurance also continues to grow, as seen in the FEUC numbers that continue to rise.

Starting in May, the economy has recovered a bit less than half the jobs that it lost in March and April. But this recovery has mainly been among highest paid workers, who have regained almost all their lost jobs, while those making $20 an hour or less have seen their jobs numbers still down 16-20% as compared to before the pandemic.

African Americans and other oppressed nationalities were not only hit the hardest by job losses, but have seen fewer of their jobs come back. For Chicano, Latino and African American renters, more than 40% had little or no confidence that they could pay their rent in August. This was also seen in the housing bust leading up the 2008 financial crisis, where African American, Chicano and Latino, and Asian Americans were hit hardest by foreclosures and falling home prices.

Despite years of evidence to the contrary, Trump’s economic advisor Larry Kudlow continued to insist that “a rising tide does lift all boats.” But the reality is that Trump and his billionaire bros are riding out the economic tsunami on their yachts, while working people are seeing their livelihood, homes, and even meals being washed away.

#SanJoséCA #stockMarket #Trump #600UnemploymentBenefit

San José, CA – On Thursday, May 14, the Labor Department reported more bad news, saying that almost 3 million people applied for unemployment insurance in the previous week ending May 9. This means that over the last eight weeks more than 36 million people applied after losing jobs and income. Another 3.5 million are collecting the federal government’s Pandemic Unemployment Assistance, or PUA, which goes to the self-employed. This brings the total number of recently unemployed people to about 40 million.

This report was worse than mainstream economists expected, with a drop of only 200,000 from the week before, when 3.2 million people applied. At the current rate it would take 12 more weeks for Unemployment Insurance claims to drop below to the pre-pandemic record high of 695,000 claims in one week, set back in October 1982. By that time a stunning 60 million people would have lost their jobs, pushing the unemployment rate to 40%, much worse than the Great Depression 1933 high of 25% unemployment.

Of course, two weeks does not make a trend. But this worst-case scenario led Federal Reserve Chair Jerome Powell to tell Congress on Wednesday that more federal government spending could be needed, saying “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

The Federal Reserve also released a report showing how lower-income Americans are being hit hardest by the crisis. 40% of households with incomes of $40,000 or less had someone lose their job, as opposed to only 13% of households earning more than $100,000 a year.

This week congressional Democrats unveiled a $3 trillion package of aid for state and local governments, extension of additional unemployment benefits (which now expire July 31), renter and mortgage relief, and additional payments to individuals, among other things. But despite the warning of Fed Chair Powell, Senate Republicans hardened their opposition to more financial aid for the COVID-19 economic disaster. Instead they want to guarantee businesses from any liability for putting workers back into unsafe working conditions. President Trump also threatened to veto the bill, saying that it was not related to the pandemic economic crisis.

#SanJoséCA #PoorPeoplesMovements #Unemployment #Healthcare #PeoplesStruggles #stockMarket #UnemploymentBenefits

San José, CA – On Thursday, April 30, the U.S. Department of Labor reported that more than 3.8 million new claims for unemployment insurance or UI were filed in the previous week ending April 25. This means that over the last six weeks more than 30 million claims have been filed. This means that the actual unemployment rate is about 25%, a level similar to the worst of the Great Depression of the 1930s.

The number of people who are getting Unemployment Insurance benefits as of a week earlier, or April 18, reached 18 million, the highest ever. Since 27 million people had applied for benefits as of that time, more than a third of them have not received their benefits yet. One of the worst states in this regard was California, which reported payment rates below 15%, or that 85% of people who applied have not started to get their benefits. One study said that as many as 8 million more jobless workers did not file. They were either stymied by snarled phone lines and crashing web sites in states across the country or discouraged by the harrowing process. One can see the millions of people who are in desperate straits across the country in front of food banks.

The day before, on Wednesday, April 29, the U.S. Department of Commerce reported that U.S. Gross Domestic Product or GDP fell by a 4.8% annual rate. This measure of the total production of goods and services was led by big drops in health care spending – for example on elective surgeries, and spending on travel and entertainment, and restaurants. Most of this drop happened in March, largely before most states issued stay-at-home orders.

Almost all economists agree that the GDP report for the April to June period will be much worse, with an average estimate of a 40% drop at an annual rate. Another sign that the worst is yet to come came in this week’s report on pending home sales in March, which fell more than 20% as compared to February. This means that home sales, and then home construction, is in for a big hit in the coming months.

News was even worse in Europe. The eurozone GDP report showed a 14.4% fall at an annual rate in the first three months of the year, almost three times as bad as the United States. Some of the worst hit countries were Spain and France, whose GDP dropped by about 20%. This was largely because much of Europe was falling into recession in the last three months of 2019 and is the worst since the end of World War II.

What became clear is that much of the support for lifting stay at home was a way to force workers to go back to their jobs even if it was not safe. President Trump ordered meat packing plants, which along with prisons, have some of the largest outbreaks of COVID-19, to open. He claimed authority under the War Production Act or WPA, saying that meat production was of national security interest. Republicans such as right-wing governor of Iowa Kim Reynolds warned that workers who don’t return to work will be cut off of unemployment.

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San José, CA – More than 4 million more Americans filed for Unemployment Insurance, or UI, benefits last week according to the latest Labor Department report on Thursday, April 23. This brings the total number of new claims over the last five weeks to 27 million.

While the number of new claims did drop by a million new claims from the week before, it was still the highest number on record aside from the previous two weeks. Adding last week’s jobless workers to the unemployment rate brings it to more than 20%, closing in on the Great Depression record of 25% unemployment. There are still many laid-off workers who have not been able to apply for Unemployment Insurance benefits, and layoffs are spreading. Just in the last week, mines, factories, colleges, libraries, hospitals and transportation companies announced more job cuts and closings – all of which won’t be counted until next week’s report.

Other economic reports showed the pain spreading throughout the capitalist world. The IHS Market Purchasing Managers Index, or PMI, for April saw record declines in the United States, the eurozone, and Japan. These indexes of business activities have a break-even level of 50: more than 50 is an expansion, less is a contraction. In Japan the index fell to 27.8 in April, to 27.4 in the United States, and a stunning 13.5 in the eurozone, less than half the level following the 2008 financial crisis.

This contraction in the United States would reflect a 30% annual rate of decline in Gross Domestic Product for the second three months of the year, April, May and June. One of the big four U.S. banks made an even more dire forecast of a 35% rate of decline in Japan, 40% in the United States and 45% in the eurozone. Declines of this size are like squeezing a year of contraction during the worst decline of the Great Depression from 1930 to 1932 into a three-month period.

The COVID-19 pandemic is also beginning to disrupt food supplies in the United States as more and more meat-packing plants have to shut down because of infections among their workers spreading to nearby communities. Farmers are having to plow their crops under and dump their milk as they lose buyers and workers. There is a major outbreak of the coronavirus at an Amazon warehouse near New York City.

The growing production problems caused by the pandemic shows that the “economy vs. health” argument is a fundamentally false one. What is hurting the economy is the pandemic, and capitalism’s inability to deal with it – unless and until the virus is contained, more pain will come to the economy, to workers and their families, and to communities as workplace-centered outbreaks grow.

Along with stories of big corporations taking advantage of the federal relief program that was supposed to be for small businesses, others are taking advantage of the pandemic to boost their profits at the expense of working people. The country’s largest egg producer is being investigated for price gouging, leading to rising prices for eggs.

Last but not least, more and more local and state governments are warning of budget cuts and layoffs as their tax revenues fall. There was supposed to be aid for them in the latest relief bill, but Republican opposition in the Senate gutted that aid, now limited to more small businesses and hospitals. Republican Senate leader McConnell even said that states should be allowed to go bankrupt, allowing them to slash pensions and break union contracts. This is another assault on public sector workers, and could lead to drastically reduced education and other services across the country.

#SanJoséCA #PoorPeoplesMovements #Unemployment #US #Healthcare #PeoplesStruggles #stockMarket #DonaldTrump #COVID19

San José, CA – Earlier in the day, I glanced at oil prices and saw that they were down 40% for the day at about $10 a barrel. Pretty bad, I thought. Then after financial markets closed, I got a call about it. I looked and saw that the closing price was negative $37.63 and let out an f-bomb, the first of about a half a dozen in my three minute conversation.

Oil futures for May fell more than 300%, from $18.27 on Friday, April 17, to deep in negative prices on Monday, April 20. With futures for June down but still at positive at about $20 a barrel, typically speculators could profit by buying the cheap May future, taking the oil delivery, and then selling the June future and delivering the oil in June. Normally this arbitrage would keep the futures prices within about $10 of each other. But the world is so awash in oil that there is almost no place to store extra oil in the United States. Thus, speculators and hedge funds were willing to pay to take the oil off their hands.

This crisis of overproduction in the oil market is mainly because of the steep drop in oil purchases because of the worldwide recession triggered by the COVID-19 pandemic. Socialist China, where the pandemic began, had to lock down their country in a successful attempt to control the virus. New infections are now down to less than 100 per day, many, if not most, from Chinese returning from other countries. But the cost was steep, as the total production of goods and services, or GDP, fell more than 6% from a year earlier. This is China’s first fall in GDP since they began to report it in 1992. Even though China’s manufacturing is returning, service industries are slower to come back. Now that China has become the world’s largest importer of oil, world oil markets took a big hit.

But the pandemic situation in Europe, another major oil importer, is much worse. Despite the news about ‘reopening’ some of the economies, COVID-19 is still raging, with the United Kingdom alone reporting almost 6000 new infections. Together with Spain, Italy, Germany, Belgium and the Netherlands, each of which had over 1000 new infections reported, and other European Union countries, there were about 20,000 new COVID-19 cases despite stay-at-home orders across the continent. This has cut deeply into European imports of oil.

But Europe pales beside the United States, with almost 30,000 new infections reported, and much of the country (but not all) trying to stay at home. More than 20 million people in the United States have lost their jobs in just the last four weeks, and layoffs continue. Oil consumption in the United States has fallen by one-third just in the last month. The United States is still the world’s largest consumer of oil, which puts a huge dent in world oil consumption. While the U.S. is no longer a big oil importer, the drop in consumption means that the extra oil is piling up in the United States.

While not the main reason, a trigger for the recent collapse in the price of oil even before today was a price war between Saudi Arabia and Russia, the two biggest oil producers. While they were trying to gain market share from each other, they had a mutual target in mind: U.S. oil producers, where it is more costly to produce oil.

Even though the price of oil is now well below the cost of producing oil in the United States, U.S. oil companies cannot just turn off production. The big increase in U.S. oil production over the last ten years has been shale oil. The hydraulic fracturing or fracking process has never been turned off before and could lead to equipment damages or even not being able to restart production.

The drop in oil prices dragged down the stock market on Monday, with the Dow Jones Industrial Average down almost 600 points or 2.5%. The Dow has fallen 20% from its all-time high earlier this year as Wall Street investors have faith in the huge efforts by the Federal Reserve and the federal government. In contrast, oil prices (using the barely positive $1.26 as oil prices bounced back after the close of U.S. trading) are down 97% from the beginning of the year, and show a much more pessimistic view of the real economy right now.

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San José, CA – On Thursday, April 16, the U.S. Department of Labor released their latest report on new claims for unemployment insurance, or UI, benefits showing 5.2 million more people applied. This means that more than 22 million people have lost their livelihood in the last four weeks. The number of people actually collecting unemployment insurance benefits soared to 12 million, the highest ever.

While the number of new applications did fall by about 1 million from the previous two weeks, the current figure still understates the number of people who lost their jobs and weren’t able to file, as states still scramble to fill the demand for claims. Adding these 5 million people to the unemployment rate would push the rate of close to 18%. Even this is an understatement, as most of the people who lost their jobs in early March did not look for work and were not counted as unemployed. Adding another million more people and those who have not been able to apply yet means that the unemployment rate was close to 20% by mid-April.

The continuing near-record level of unemployment insurance numbers show that the first wave of layoffs were in travel and leisure, and the second wave of workers included those whose businesses had to close down, followed by a third wave of workers, including many who can work at home, whose businesses are cutting back as their sales tank.

In addition to millions of renters not being able to pay rent in April, millions of home buyers are missing their mortgage payments. Over the last month, the percentage of home mortgages which are at least 30 days late has soared from 0.2% to 3.7%. While the recent Federal CARES act (which included bail-out money for big businesses, loans to small businesses, increased unemployment insurance payments, and individual relief checks) allows for federal agency mortgages to be deferred, only about half of all mortgages are covered.

More signs of economic crisis came in a report indicating that starts on the construction of new homes fell 22.3% in March as compared to February. This is the largest one-month decline since 1984. Following up on the record decline of manufacturing in New York, today the Philadelphia Federal Reserve said that their index of manufacturing fell from -12.7 to -56.6 in April. New orders fell even more, pointing to even worse conditions in the future.

City, county, and state governments are also under strain. Almost 90% of these local governments have seen their revenues from income and sales taxes fall, and more than half are planning cuts. One of the hardest hit is New York City, the epicenter of the pandemic in the United States. The city government is already planning $3.5 billion less spending the current year.

While Democrats in Congress want to add more aid to local governments in the next pandemic relief bill, Republicans in the Senate and President Trump want to limit the aid to more money for small businesses, as the relief loan program is almost out of money in only two weeks. While Democrats agree to more small business loans, Trump and his followers are sticking to a familiar “my way or the highway,” holding up all the aid.

But despite all of this dismal economic news and the prospect of gridlock on badly needed federal aid, Wall Street managed to eke out a small gain across all the major stock market indices. This is the fourth week in a row where more pain for workers meant more gains for Wall Street.

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San José, CA – For the second week in a row, the U.S. Department of Labor reported April 9 that more than 6 million people applied for unemployment insurance in the previous week. The Labor Department also revised up last week’s claim numbers to 6.6 million, meaning that a total of 16.8 million people have lost their jobs and applied for UI benefits in just the last three weeks. The actual number could be higher as many states’ websites, phone lines and paper application sites were swamped.

The number of newly unemployed is about 10.3% of the labor force. Adding these numbers to the official unemployment rate of 4.4% based on surveys in the first part of March, the unemployment rate was 14.7% as of last week. This number does not include all those who were not able to file or who were still being laid off this week. This means that the unemployment rate as of last Saturday was almost 15%, the highest since records began in 1948. It is likely to be the highest unemployment rate since 1939, when the U.S. economy began to pull out of the Great Depression.

While at least two states, New York and Illinois, said that they were processing the additional $600 a week from the recent federal government relief law, many states have not started, leaving millions without the additional benefits that have been promised. Some states have said that these additional benefits may not be available for up to five weeks. Other states, such have Utah, were not taking applications from people who were self-employed, although the recent federal relief law also covers them. And the $1200 per adult payments are not coming until at least next week.

With unemployment benefits only covering about 55% of a worker’s income on average, and others still waiting for their claim to process or unable to even apply, demand for food banks has gone up as much as ten-fold. Lines of cars, literally miles long, have been reported at food distribution sites, including one just across from President Trump’s Mar-a-Lago resort. Food banks also face fewer donations as many restaurants which donated leftover food are closed and grocery stores are selling out.

According to NMHC, a group of apartment owners, about 13% fewer tenants paid their rents on time at the beginning of April as compared to a year ago. While some cities have banned evictions for the time being, landlords are expecting to be paid in full by their unemployed tenants. This means millions of families that are struggling to survive without a paycheck also have the threat of homelessness hanging over their heads in the midst of a pandemic.

But for the third week in a row, Wall Street rallied in the face of economic calamity for millions of workers and self-employed. The broadest major stock market index, the S&P 500, rose by almost one and a half percent on news that the Federal Reserve was expanding their lending again by more than $2 trillion to support the investors who bought corporate and municipal bonds (bonds issued by state and local governments).

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San José, CA – The headline news that the unemployment rate for March jumped by almost a full percentage point, to 4.4%, was bad enough. The actual unemployment rate was much higher by the end of March, given that the more 10 million people who lost their jobs and filed for unemployment insurance benefits in the last two weeks of March were not counted. Adding in these workers would have increased the unemployment rate by more than 6%, raising the total rate at the end of March to about 10.5%.

The official government unemployment rate also understates the number of jobless workers, as you have to be out of work and looking for work. With so many businesses shutting down and schools closing, many workers who were laid off didn’t look for work. According to the U.S. Department of Labor’s Employment report released on Friday, April 3, more than 1.5 million people stopped looking for work. If these workers were counted, the actual unemployment rate at the end of the month would have been another percentage point higher, at 11.5%.

The employment report also showed a big jump in workers who are working part time because they can’t find a full-time job. This group of workers increased by almost 1.5 million just in the first half of the month. The rise in part-time workers also dragged down the average number of weeks worked in March. While they are still counted as employed by the Labor Department, they and their families are feeling the economic stress of the economic crisis.

Latinos and Asian Americans saw their unemployment rates jump by 1.6%, more than twice the increase of white Americans. This reflected the high concentration of these oppressed nationality workers in food services, the hardest hit industry in the beginning of the month. Latino workers have the highest percentage going without health insurance, putting them at greater risk during a pandemic. Latinos and Asian Americans also have the highest percentages of immigrants and undocumented – many of whom are restricted from getting any aid from the federal relief money going out to individuals starting next week.

#SanJoséCA #PoorPeoplesMovements #OppressedNationalities #Unemployment #US #Healthcare #PeoplesStruggles #AsianNationalities #ChicanoLatino #stockMarket #DonaldTrump #COVID19

San José, CA – On Friday, April 3, the U.S. Department of Labor reported that businesses cut more than 700,000 jobs last month. This report was based on surveys from the first half of March, before the full impact of the COVID-19 pandemic hit. This ended the longest streak of job gains – almost nine and a half years – and almost certainly marked the beginning of a recession.

The official word on when recessions start, and end, comes from the National Bureau of Economic Research or NBER. The NBER uses four factors: employment, personal income, business sales and industrial production. While the monthly reports on income, sales and industrial production won’t be released until later in the month, with the job losses and cuts in wages and hours, business closing, and factories shutting down, they will all be down for the month. And of the four, the NBER considers the job numbers as most important.

The first wave of layoffs hit the service industries, with restaurants and bars cutting more than 400,000 jobs in the first half of the month. Healthcare also lost more than 60,000 jobs. Despite the frantic scenes of hospitals being overwhelmed with COVID-19 patients, the country’s dentists, smaller doctors’ offices and other health providers were closing. Not surprisingly, temporary workers and retail workers also has job losses close to 50,000 each. But even during the first half the month, the job losses had spread to other sectors, including construction and manufacturing.

From the new applications for unemployment insurance, we know that at least 10 million more workers lost their jobs in the last two weeks of March, and job losses are continuing in April. Even many workers whose businesses did not have to close because employees could work from home are now laying off workers and cutting hours as their sales decline along with the economy. After a surge of buying, grocers and drug stores are reporting that sales are falling back.

The federal government’s new guaranteed loan program for small businesses got off to a rocky start today, with at least one major bank not ready to offer loans and another only taking applications from existing customers. Banks are also tightening up on their lending in general, which will limit credit and make the downturn worse.

Rent and mortgage payments came due on April 1, and there is no telling how many households won’t be able to come up with payments. Even in places where the local government has put a moratorium on evictions, the past due rent will be piling up into massive debts. Despite the new law paying for COVID-19 testing, treatment is not covered, and medical bills are piling up, putting both patients and hospitals at financial risk.

Most economists believe that the economy will bounce back quickly and rule out the possibility of a long recession or even a depression. But the last time the economy went into free fall, during the financial crisis in 2008, it took years for the lost jobs to come back. The 10 million jobs lost in the second half of March is just the beginning, not the end, of the job plunge. With more jobs lost in just two weeks than in the two years of the last recession, there is little reason to believe that the economy will recover quickly. While there is no official definition of a depression, an economic crisis worse than 2008 and lasting even longer will certainly feel like one to working people.

#SanJoséCA #US #Healthcare #PeoplesStruggles #stockMarket #DonaldTrump #COVID19 #economicDepression

San José, CA – New claims for Unemployment Insurance (UI) benefits doubled from record numbers just a week earlier. On Thursday, April 2, the Department of Labor reported that more than 6.6 million people applied for state unemployment insurance benefits for the week ending March 28. This means that almost 10 MILLION people lost their jobs and applied for UI benefits in just the last two weeks of March. This economic crisis has caused more job losses in two weeks than the entire 2007 to 2009 recession, where 8 million jobs were lost.

Like the week before, Wall Street rallied, with the broad S&P 500 Index up 2.28% and the headline Dow Jones Industrial Average gaining 450 points. This is just another example of how the interests of the wealthiest 1% of Wall Street, who own half of all stocks, and the working people of America have opposing interests.

A week ago, Steve Mnuchin, Trump’s Secretary of the Treasury, dismissed the record unemployment insurance benefit applications as “not relevant,” because of the bipartisan pandemic disaster bill that had just been signed into law. The $1200 payments to individuals are supposed to start April 9 for those who have direct deposit for their tax returns. But it will take up to 20 weeks, or almost five months, for checks to be mailed to people who the IRS doesn’t have bank records for.

The layoffs are spreading. What began with smaller businesses that had to shut down is spreading to more and more medium and large businesses. A number of major retailers such as Macy’s, Gap and Kohls, who had already shut their stores, announced that they were furloughing most of their workers. Job losses in manufacturing and construction are picking up as sales dry up and public health restrictions expand. Even white collar and technology jobs that can be done at home are being lost as companies cut workers in the face of falling sales. Many of these layoffs won’t show up until next week’s report.

With surveys showing that 40% of households could not make the rent or mortgage if they lost their jobs, millions will not be able to pay this month, and even more next month. While a number of state and local governments have banned evictions temporarily, tenants will still owe their back rent. What began as a public health crisis with the lack of preparation for the COVID-19 pandemic is turning into an economic crisis which the United States, with its weak safety net, is also not prepared for.

#SanJoséCA #PoorPeoplesMovements #US #Healthcare #PeoplesStruggles #unemploymentInsurance #stockMarket #DonaldTrump #COVID19

San José, CA – Last week the financial news was dominated by the falling stock market, which had its worst week since the 2008 financial crisis. But behind the scenes the U.S. Federal Reserve, or Fed, was working feverishly to prevent another financial crisis, taking actions not even done during the 2008 crash.

Wall Street ended the week with stocks falling again on Friday, March 20. All the major stock market averages fell by about 4%, to end the week down 13%. The Dow Jones Industrial Average wiped out all its gains during the Trump administration and is down 35% over the last month.

At the same time, stress continued to build in the financial markets. Usually when stock prices go down, bond prices go up, as investors rush to the safety of more stable bonds. But on Wednesday, March 18, the supposed safest of the safe, U.S. government bonds, fell as investors were desperate to sell to raise cash. When bond prices fell, interest rates went up. This happened despite the Fed restarting its Quantitative Easing, or QE, program of buying longer-term U.S government and mortgage backed bonds.

One of the most important functions of the Federal Reserve is to be a ‘lender of last resort’ during financial crises. To prevent a total meltdown of the financial system, during the financial crisis in 2008 the Fed started to buy longer-term bonds (QE) and insured money market mutual funds – often called a ‘shadow banking’ system, as they make loans using investors’ money but aren’t insured or regulated as tightly as banks. While the Fed cannot directly make loans to non-financial businesses, it extended loans to banks and other finance companies to buy so-called ‘commercial paper’ which are short term IOUs issued by companies. The Fed opened up its ‘discount window,’ where it makes loans directly to commercial banks.

The Fed did all this during the last two weeks. While other loan markets seemed to settle down towards the end of the week, a crisis emerged in municipal debt, that is bonds issued by local and state governments. On Friday, March 20, the Fed began to lend money to financial institutions to buy municipal bonds, an action that was not needed in 2008.

Back in 2008, the financial crisis was mainly caused by speculation in a housing market that was supercharged by exotic mortgages which were anchored by Wall Street financial derivatives. While the economy was in a recession that started in December of 2007, unemployment had only risen by 1.7% (from 4.4% to 6.1%) between the pre-recession low in May of 2007 and the financial crisis in September of 2008. GDP – or Gross Domestic Product, the measure of all goods and services sold to households, businesses, the government, and other countries – fell 2.1% during the last three months of 2008.

On Friday, Wall Street investment bank Goldman Sachs predicted that unemployment insurance claims could top 2 million next week, an eight-fold increase from this week’s report. This means that by the end of the month, unemployment could rise this month as much as the last recession took in 16 months. Even worse, the bank predicted that GDP would fall at a 24% annual rate in the April to June period, or about 6% in the three months. This is the fastest drop on record going back to World War II. During the Great Depression, total GDP fell about 30% between the summer of 1929 when the downturn began, and the low point in the summer of 1933, or at about 2% each quarter. This means that GDP could fall at three times the rate as the worst downturn in U.S. history.

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