NEW YORK - Stocks slumped for a second straight session Tuesday after Wall Street saw an unexpected contraction in the service sector as evidence that the economy is sinking into recession. The Dow Jones industrial average fell more than 300 points, while bond prices rose.

The Institute for Supply Management said its January index of the service sector, which accounts for about two-thirds of the economy, dropped below 50, indicating contraction. Economists had been expecting another month of growth; the last time the service sector contracted was in March 2003.

http://news.yahoo.com/s/ap/20080205/ap_on_bi_st_ma_re/w...QUUdNzrtlvErN7Gs0NUE


when will the rabid anti's realize that smoking bans are killing the economy..

Services index plummets


The Institute for Supply Management's index of non-manufacturing plummeted to 41.9 from 54.4 in December, its largest monthly decline on record and a far greater drop than Wall Street expected. A Reuters poll of economists had produced a median expectation of a slip to 53.0

"The recession has indeed arrived," said Jane Caron, chief economic strategist at Dwight Asset Management in Burlington, Vermont.

A reading below 50 indicates contraction, and bond prices jumped as the figures reinforced investors' conviction that the U.S. economy is already in recession. Stocks sold off.

The employment index fell to 43.9 from 51.8, corroborating last week's dire U.S. payrolls report, which showed the first net monthly contraction in the labor market in more than four years.

Weakness was evident across the board. A measure of new orders fell to 43.5 from 53.9.

"It's another recession marker on the radar screen," said Cary Leahy, economist at Decision Economics in New York.

Lately, it is the consumer that appears to be throwing in the towel.

http://news.yahoo.com/s/nm/20080205/bs_nm/usa_economy_s...JbVRV9N.neSD2gys0NUE

Apparently, the U.S. is just dying on all sides because of Big Government.

In case you've been wondering when all of this stupidity was going to bite us in the ass, the time is coming.

Here is David Walker, the current U.S. Comptroller (that means he's the U.S. Government's personal accountant), on "60 minutes". He's been touring the nation, screaming from the mountaintops that we're headed toward an enormous economic collapse.

As 60 minutes notes, they attempted to find balance for his arguments, a counter-point to his doom and gloom scenario. They couldn't find one.

I did some Googling. Neither could I.

http://video.google.com/videoplay?docid=-74614074983779...ype=search&plindex=0

Here is Walker's powerpoint presentation in PDF form. I took a look at it earlier tonight.

http://www.gao.gov/cghome/d08446cg.pdf

Walker states that saving our economy will require that we "fundamentally Reexamine & Transform for the 21stCentury (i.e., entitlement programs, other spending, and tax policy.)"

What he means, I think, is people are just going to have to get used to the fact that they can't look to the government to solve their problems anymore.

We don't have any money, in fact we have major negatives, just to support the programs we already have. Adding new programs? Definite national, economic suicide.

There is a presidential candidate still in the race who is willing to grab this bull by the horns. He won't be elected president. I won't even mention his name.

Here's the worst news. You'll take exhibit A, the present mortgage crisis. My understanding is that this was largely caused by Big Government imposing itself on lenders to give people mortgages to people who couldn't afford mortgages. Right of Left, politicians agreed to this because it would temporarily stimulate the economy, make them look good, and give people a stake in the American dream of home ownership...that is until the interest rates increased again.

In other words, politicians will ignore any impending crisis for the sake of political expediency.

Even if the David Walker is off by quite a bit, I don't the "gifts" that Hillary Clinton is putting under our collective Christmas tree is going to improve the situation.

http://video.google.com/videoplay?docid=-38054193480661...ype=search&plindex=3

Take a look at Jemeye's original post. The service sector is shrinking. In other words, fast food restaurants, gas stations, and 1-800 numbers are hiring less people. That's bad. Real bad.

http://video.google.com/videoplay?docid=258886030808420...ype=search&plindex=0

Last, my rudimentary understanding is that recessions are natural contractions. The economy sometimes gets too big for it's true britches, then settles down back to size via recession and contraction and people suffer for a period of time.

In the face of this, the President and Congress are going to spend 160 billion to send us all a $600 check. From what I understand, what they are actually doing is delaying the inevitable and further expanding the economy, so it will contract (collapse) even more, at a time when they hopefully won't have to deal with it.

The solution? If Walkier is right, it's unthinkable to most. You'd have to reduce the Federal Government to the size it was at the end of the Civil War or at the turn of the century. Other measures will only delay the inevitable.

This message has been edited. Last edited by: WinstonSmith,

The 18th Amendment (Prohibition) was repealed during the Great Depression. Maybe smoking bans during a recession?

In my opinion, excess social security contributions powered the building of the national highways, got us to the moon and back, crushed the Soviet Empire, and financed most of the other social programs. Those surplus payments are about to cease as the boomers retire and general funds will be needed to fund benefits.

The Federal Government will have to shrink to cover the costs. Departments of Health, Education, and Welfare will shrink as necessities of government will take precedence. The states will try to compensate for a while but will also be over whelmed.

Once the US consumer stops buying China's goods it will no longer feel the need to prop up our currency and will present the bonds they are holding for payment. We will then become a 3rd world country and be a mecca for manufacturing again.

While we are standing in lines for toilet paper no one will care how far away from a door or window we are while smoking.

quote:

While we are standing in lines for toilet paper no one will care how far away from a door or window we are while smoking.

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LOL Words of Wisdom as always, Bruce. I love your posts.

quote:

Here's the worst news. You'll take exhibit A, the present mortgage crisis. My understanding is that this was largely caused by Big Government imposing itself on lenders to give people mortgages to people who couldn't afford mortgages.

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Right again!!
The politically correct liberals behind the credit debacle : "Perhaps the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults. At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment. Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness? From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces."