Even the cheerleaders on CNBC are going to start having to use the “R” word. Yesterday, automakers announced their worst results since the depths of the 1993 recession. Not even Toyota was spared. This morning the Labor Department announced that last week’s new jobless claims soared to 497,000, the most since the weeks after 9/11. And finally the crucial ISM manufacturing index slipped 4% (as against the expected 2%) for the month of September.
We need to be really clear. We have two problems–a credit crisis and a cyclical recession. The two are connected, but solving the credit crisis will not stop the recession. It will just keep it from turning into a depression.
This is why we can’t spend the whole $700 billion on Wall Street. We need to keep some powder dry for the Rebuild America Plan.