recession

Who said anything about a recession? Sometime between the government bailout of Bear Stearns and the Bureau of Labor Statistics report that America lost 80,000 jobs in March, Lee Tachman spent roughly $50,000 last month on a four-day jaunt to Miami for himself and three close friends.

There is a disconnect between the real and financial sectors in the American economy today. In the real economy, it was business as usual — almost, until recently. The fundamentals remain reasonably strong, with the subprime crisis yet to cast a shadow really and, to many people as of now, is but a speed bump.

Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.

Dysfunctional capital markets, frantic central banks, stressed-out consumers, fear and uncertainty -- all are alarming echoes of the global economic cataclysm of the 1930s. Which raises the inevitable question: Could another Great Depression be lurking over the horizon?

As if the economy wasn't already fighting enough strong headwinds, the risk of capital shortfalls and outright failure of the nation's banks is rising. The Federal Deposit Insurance Corp., the federal agency that backs bank deposits, last week reported the biggest jump in "problem institutions" it has seen since the savings and loan crisis of the late 1980s. While the extent of the problem is still low by historic standards, it identified 76 banks as in trouble - a 52% increase from a year ago.

A few months ago, in a piece entitled “Subprime Geopolitics,” we addressed two questions. The first was whether the U.S. economy was heading into recession. The second was whether such a recession would represent anything more than the normal business cycle, or whether it would represent a fundamental, long-term shift in the way the American economy works. We answered that while the economy could reasonably go into recession — and we would not be surprised if it did — in our view, a recession did not seem imminent. As for whether such a recession would represent a fundamental shift in U.S. economic life, we answered, no, this would not be “the big one.”

Even when experts were declaring the economy healthy, many Americans voiced a vague, but persistent dissatisfaction.

DAVOS, Switzerland (Reuters) - There is no end in sight to fallout from the credit squeeze that may trigger a big slowdown in U.S. growth and chill other economies too, a top central banker said on Friday. This week, stocks suffered their biggest one-day fall since the 9/11 attacks on the United States as investors feared the credit squeeze triggered last August by defaults in the U.S. mortgage market would tip the United States into recession.

European stocks nose dived Monday in a global market rout on concerns the US might be heading for a recession. Analysts say investors are now faced with the prospect of a bear market and should brace for more of a downside.

Global stock markets plunged on January 21 and 22, many of them taking their worst losses since 9/11 amid fears of a U.S. recession.