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We all hear about the bad Economy every day in the news and how it is going to get worse more before we see a light at the end of the tunnel. We hear in every party conversations economy is a part of it these days. It is so bad that people are stressed out worrying for making their living. There is also a big hope on the so called STIMULUS Plan 2.0 which is expected to jump start the economy.

Economy is so bad,
Let me start with a lighter note. I heard sales on Hair cuts by Great Clips. They are offering $5.99 for all ages starting this Feb till end. It is one of the biggest Hair Salon chain having 2700 locations around the nation. If they are running deals, that means they are down on sales which in turn tells people aren’t spending a lot these days for extras not even cutting hair to look good. Interesting but true and fact sales on every market is affected by this downturn.

Economy is so bad,
In December, the number of unemployed persons increased by 632,000 to 11.1 million and the unemployment rate rose to 7.2 percent.  Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points.

Nonfarm payroll employment declined sharply in December, and the unemployment rate rose from 6.8 to 7.2 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Payroll employment fell by 524,000 over the month and by 1.9 million over the last 4 months of 2008.  In December, job losses were large and widespread across most major industry sectors.  (Household Survey Data)

Economy is so bad,
In 2008, the number of identity theft cases jumped 22 percent to 9.9 million, according to a study released yesterday by Javelin Strategy&Research. The good news is that the cost per incident – including unrecovered losses and legal fees – fell 31 percent to $496.

Crimes of opportunity, such as stolen wallets, were linked to 43 percent of cases last year, up from 33 percent in 2007. That might be why women were 26 percent more likely to be victims of identity theft; they reported more cases of lost or stolen information during in-store purchases. Online access accounted for only 11 percent of cases, according to the survey.

Economy is so bad,
US Automakers like Crysler, GM are asking for more money to save their company and the thousands of jobs in Detroit. Many banks gone resolvant and big companies like Circuit City gone bankrupt. Many more too follow.

The list goes on and on. We will Continue in Part 2. If you want to add it, please add as your comment.

For easy understanding, let us use the simple analogy of current financial market to the overweight mid-aged man who is having heart problem. Economy is now in a critical situation like this patient. He has heart attack and doctors are trying to revive him back by giving periodic shocks. He is alive and well for a day or two but he goes back again to a bad situation. Doctors been trying hard with different treatment everyday. Similarly, Treasury secretary Paulson and Fed Charman Ben Bernake are working like doctors to revive back the economy with their best tools and arsnels. Those colorful financial packages I mentioned above are few of their thoughtful treatments to bring back the economy(patient) to a somewhat steady state or atleast make him live without going to a worse situation.

Is the economy going off the cliff?

It might seem that way with all news coming out everyday. It is actually very close to under recession. Many say its already in recession. But the odds are pretty darn good economy (Patient) is going to pull through fine like it in 1980’s and other times. No one knows for sure. It is a cycle and it got worse due to the subprime mortgage crisis and credit crunch. Important thing is it going to take time and extended period of physical therapy like streamlining the lending process, other financial to-do’s to get back in shape as a nation.

What happened to the economy?

Patient needs blood to circulate freely to live, economic version of blood is credit. It is good credit, not credit we talk in credit cards. Credit you loan to business and bank. Small business owner needs credit to buy more build business, put inventory, hire more employee. Consumer also needs credit to buy an house who can really afford. So during the last past months, the credit has frozen /seized like clogged artery in the patient. If the credit drys or banks don’t have money to lend or loan to small business, it will be the end of small businesses. They won’t be able to buy things for their business, hire people and can’t fund their business, which is bad? If small business is the back of bone of any economy especially US. If they can’t run their business efficiently, it will shake up the foundation of the economy and put it great depression.

What is being done to fix it?