Changes

In January 2009 the downturn worsened, as major companies and small firms announced round after round of layoffs and postponement of expansion plans.  The financial sector worsened sharply in January, indicating the the huge financial bailouts of 2008 were not enough. The steep slide continued as unsold goods piled up. The GDP (gross domestic product) shrank at a -6.2% annual rate in the fourth quarter (last three months) of 2008, the sharpest contraction in 26 years.<ref>Jack Healy And Louis Uchitelle, "Steep Slide in U.S. Economy as Unsold Goods Pile Up," [http://www.nytimes.com/2009/01/31/business/economy/31econ.html?_r=1&hp ''New York Times'' Jan. 30, 2009]</ref>

In January 2009 the downturn worsened, as major companies and small firms announced round after round of layoffs and postponement of expansion plans.  The financial sector worsened sharply in January, indicating the the huge financial bailouts of 2008 were not enough. The steep slide continued as unsold goods piled up. The GDP (gross domestic product) shrank at a -6.2% annual rate in the fourth quarter (last three months) of 2008, the sharpest contraction in 26 years.<ref>Jack Healy And Louis Uchitelle, "Steep Slide in U.S. Economy as Unsold Goods Pile Up," [http://www.nytimes.com/2009/01/31/business/economy/31econ.html?_r=1&hp ''New York Times'' Jan. 30, 2009]</ref>

Meanwhile, at the urging of the [[Obama Administration]], Congress passed a $789 billion stimulus package, combining new spending and tax cuts, in the hopes of turning the economy around by mid-2009.  Republicans were nearly unanimous against the proposal, as their smaller package was voted down. Canada, although not as hard hit as the U.S., is preparing its own stimulus package.  

Meanwhile, at the urging of the [[Obama Administration]], Congress passed a $789 billion stimulus package, combining [[Direct_spending#New_spending|new spending]] and tax cuts, in the hopes of turning the economy around by mid-2009.  Republicans were nearly unanimous against the proposal, as their smaller package was voted down. Canada, although not as hard hit as the U.S., is preparing its own stimulus package.  

*see also [[Economic stimulus package]]

*see also [[Economic stimulus package]]

[[File:Pers-income.jpg|thumb|400px|Personal income; change from previous year]]

[[File:Pers-income.jpg|thumb|400px|Personal income; change from previous year]]

===Money===

===Money===

In terms of a monetary explanation, there is far more money around, thanks to the stimulus programs of the Federal Reserve, Treasury, and Congress. However the velocity is down to the lowest rate since 1991.  That is, people and business are saving and not spending.  Banks are not lending. The nation’s banks in March 2009 had reserves of $679 billion, up from only $45 billion in August 2008.  Individuals are keeping their cash in the banks, or paying off credit cards and debts, and not buying new merchandise.  The goal of federal stimulus spending is to get new spending going, to create jobs and keep businesses from slowing down.  If people do start spending again all the extra money will cause inflation, but in that case the Federal Reserve plans to reduce the money supply and, hopefully, restore normalcy and prosperity.<ref> Mark Gongloff, “Best Check on Inflation: Broken Banks,” ’’Wall Street Journal,’’ Mar. 20, 2009</ref>

In terms of a monetary explanation, there is far more money around, thanks to the stimulus programs of the Federal Reserve, Treasury, and Congress. However the velocity is down to the lowest rate since 1991.  That is, people and business are saving and not spending.  Banks are not lending. The nation’s banks in March 2009 had reserves of $679 billion, up from only $45 billion in August 2008.  Individuals are keeping their cash in the banks, or paying off credit cards and debts, and not buying new merchandise.  The goal of federal stimulus spending is to get consumer spending going, to create jobs and keep businesses from slowing down.  If people do start spending again all the extra money will cause inflation, but in that case the Federal Reserve plans to reduce the money supply and, hopefully, restore normalcy and prosperity.<ref> Mark Gongloff, “Best Check on Inflation: Broken Banks,” ’’Wall Street Journal,’’ Mar. 20, 2009</ref>

==US==

==US==

The economies in Europe and Russia are headed down, as are most third world countries. Eastern Europe is very hard hit, as is Ireland and Iceland.  Economic growth in China continues at a much lower pace than usual, throwing tens of millions out of work there.  The oil producing nations have seen their revenues plunge with the decline of oil prices.

The economies in Europe and Russia are headed down, as are most third world countries. Eastern Europe is very hard hit, as is Ireland and Iceland.  Economic growth in China continues at a much lower pace than usual, throwing tens of millions out of work there.  The oil producing nations have seen their revenues plunge with the decline of oil prices.

==U.S. Politics==

==U.S. Politics==

The Obama Administration has been basing its domestic policies on the assumption that the stimulus package passed in February, 2009, will turn around the economy.  The stimulus money has been spent slowly and little impact is visible by October.  The Treasury assumes that the tax revenue will be there to fund permanent new spending program in areas such as health care and greening the economy.  It assumes that the rich will recover enough of their investments to pay new taxes--right now tax collections are falling sharply as investments turn sour.  The deficit for fiscal 2009 (which began Oct. 1 2008 and ended Sept. 20, 2009, covering both Bush and Obama terms) is an astonishing $1.4 trillion, or 10% of GDP.

The Obama Administration has been basing its domestic policies on the assumption that the stimulus package passed in February, 2009, will turn around the economy.  The stimulus money has been spent slowly and little impact is visible by October.  The Treasury assumes that the tax revenue will be there to fund [[permanent new spending]] program in areas such as health care and greening the economy.  It assumes that the rich will recover enough of their investments to pay new taxes--right now tax collections are falling sharply as investments turn sour.  The deficit for fiscal 2009 (which began Oct. 1 2008 and ended Sept. 20, 2009, covering both Bush and Obama terms) is an astonishing $1.4 trillion, or 10% of GDP.

Obama's policies are delaying and retarding the inevitable economic recovery, keeping unemployment high even though the recession Obama inherited was similar to others in the past that gave way to rapid recoveries.<ref>http://online.wsj.com/article/SB10001424052748703278604574624711732528426.html</ref>

Obama's policies are delaying and retarding the inevitable economic recovery, keeping unemployment high even though the recession Obama inherited was similar to others in the past that gave way to rapid recoveries.<ref>http://online.wsj.com/article/SB10001424052748703278604574624711732528426.html</ref>