| American Economy Nearly Stalls |
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American Economy Stalls
A federal report just released showed that the American economy stalled in the fourth quarter with a growth rate of just 0.6 percent, marking its worst year since 2002.
Wednesday, January 30, 2008, US Commerce Department released a report that showed the economy had deteriorated during the October-December quarter due to the impact of worsening problems in the housing market and a tightening of credit for businesses and individuals.
The economy grew by a factor of just 2.2 percent for all of 2007. Not since 2001 was there a worse time. The major factor for this slowing of the economy seems to be the performance of the housing market. This market collapsed during 2007 sending a massive wave of bad debt in the sub prime market. Against this situation, builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years.
The White House leadership has added its concern this week with this crisis. Commerce Secretary Carlos Gutierrez said, “We are not happy with 0.6 percent GDP (gross domestic product) growth. We now need the full Congress to move forward as soon as possible because consumers---the American people---are waiting for that check and that is going to help them.
This is the same leadership position that the White House took after the 911 bombing in 2001. The Republican Administration has stressed that it is up to the American people to shop our way out of the economic crisis. To a certain extent, they are right. The American economy is based upon 70 percent consumer spending.
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