On Wednesday, President-Elect Obama and President Bush provided a study in contrasts in their respective responses to the American economic crisis. In Chicago, Obama unveiled a new economic recovery advisory board to be led by former Fed chairman Paul Volcker. Back in Washington, George W. Bush pardoned a Thanksgiving turkey. But as the lame duck poses with a turkey at the White House, a cascade of foul economic indicators provided five more signs of the deepening Bush recession.
The bad news started yesterday with a downward revision of American gross domestic product for the third quarter. In October, the Commerce Department reported that GDP for the July through September period contracted by 0.3%. As it turns out, the slowdown in Q3 was even more pronounced, with a revised figure Wednesday putting the decline in GDP at 0.5%. Looking ahead, the predictions for the fourth quarter and 2009 are grimmer still.
Helping fuel that steep decline is the collapse of consumer spending. While consumer confidence assessments were mixed this week (the Reuters/University of Michigan survey showed it at a 28 year low while the Conference Board measured a small uptick from its record low last month), consumer spending has dropped off a cliff. As the AP detailed, consumer outlays spiraled down by 1% as "Americans cut back on their spending in October by the largest amount since the 2001 terrorist attacks."
The abysmal data for durable goods orders are also jaw-dropping. In October, Americans simply cancelled or deferred plans for major purchases. After a 0.2% dip in September, orders for durable goods slid by 6.2% last month, double what forecasters had predicted.
Today's unemployment report is similarly dismal. First time jobless claims for last week totaled 529,000, a small drop over the 543,000 for the previous period. At 518,000, the four-week moving average is now at its highest level since January 1983. And while the unemployment rate already stands at 6.5%, economists surveyed by Bloomberg forecast 300,000 more job losses for November. That would bring the total for 2008 to 1.5 million.
Then there are home prices. Last week, the National Association of Realtors reported that median home prices plummeted in October by 7.7% compared to last year. On Wednesday, the S&P Case-Shiller Home Price national index revealed a 16.6% decline in the third quarter compared with the same period a year ago. That weakness was reflected in the latest Commerce Department figures for new home sales, which dropped by 5.3% to 433,000 in October. That is the lowest level since 1991.
In Chicago Wednesday, Barack Obama tried to calm Americans jittery over the economic crisis by proclaiming, "help in on the way." Meanwhile at the White House, President Bush offered the same message - for a turkey.