Last year at this time, I told our readers that while some analysts said the U.S. economic decline could continue through 2008 and the country was facing a recession, others argued that growth would continue - albeit at a slower pace. Obviously the events of September and October are proving the pessimists correct.
The economy is not just slowing - it's declining, with GDP contracting by 0.3 percent in the third quarter of 2008. Unemployment has reached a 14-year high, registering 6.5 percent in October and predicted to climb even higher. And the toll of job losses, plunging home values, and shrinking nest eggs is reflected in consumer confidence levels.
According to The Conference Board, the Consumer Confidence Index fell to 32 in October - the lowest level since the board began tracking this sentiment in 1967 and a steep decline from the 95.2 recorded by the index just one year ago. Consequently, when the GDP numbers are released for the last quarter of 2008 (with a 1 to 2 percent decline already projected), economists may confirm what we have been feeling for quite some time - that the U.S. economy is officially in recession.
Business' confidence is just as shaky as that of consumers. When the National Association of Manufacturers (NAM) surveyed its members in the third quarter, it found that only 21 percent of large companies had a positive business outlook. Smaller firms were a little more optimistic - with 61 percent having a positive business outlook. However, about half of all the companies responding to NAM's survey said they believe the economy will go into recession in 2009.
Certainly President-elect Barack Obama and the new Congress have their work cut out for them. The entire first term of his presidency will probably be devoted to finding ways to revive the economy. It remains to be seen how - and if - Obama's plans to help the nation's auto industry, to create millions of new jobs in clean energy technology and industries, to rebuild the nation's infrastructure, and to help the nation's millions of small businesses become more prosperous will be implemented.
Most importantly, consumer confidence must be restored, as consumer spending has been the engine that's driven past economic growth. When that happens, the economy will begin to revive and companies can once again begin to make capital investments, start to hire again, and put into motion their new facility and expansion plans. For this reason, it would be wise to keep our 2009 Annual Corporate Location Directory on hand and to visit us at www.corporatelocationdirectory.com for complete Google maps and state demographics/statistics and incentives information, as well as linked websites.
The President-elect has faith that yes, we can "put our people back to work and open doors of opportunity." Let us hope his refrain of "yes, we can" will inspire citizens and businesses alike.