It’s an exciting time to follow the economy. Interest rates are on the tip of everyone's tongue, oil marches higher by the day, and Ben Bernanke is getting more face time than Lindsay Lohan. With all the blabber about recession vs. recovery, inflation vs. stagflation, Chuck Norris vs. the credit crisis, and bailout vs. bankruptcy, keeping track of the latest economic news can be a Herculean task.
Fear not, Fools. In this regular series, we're here to compress the week's economic developments into a simple-to-understand summary. And we promise to keep it completely free of the hieroglyphics and eight-syllable words that weasel their way into standard academic forecasts.
Here's the latest.
Tough times
Employers axed 80,000 jobs in March, bringing the unemployment rate to 5.1% from 4.8% in February. That marked the largest one-month job loss since March of 2003. The job losses appeared to strike a wide swath of industries, from manufacturing to retail to banking.
Who's been cutting jobs lately? Schering-Plough
IMF: Grab your hard hats
The International Monetary Fund, or IMF, now predicts the U.S. will experience a "mild recession" in 2008 that could drag the rest of the world down with it. When we cough, the rest of the world catches a cold. It cited the financial crisis as the main culprit for the slowdown, referring to the subprime meltdown as "the largest … shock since the Great Depression." (I don't know if that's entirely fair. Vanilla Ice was pretty bad, too.)
For many, the biggest fear is that the financial crisis in the U.S. will spiral into other realms of the market, spreading to still-healthy financial products and causing a full-blown credit nightmare. The IMF now sees the U.S. economy growing at a puny 0.5% this year, and edging up just 0.6% next year. Grab a drink, it's gonna be a slow ride.
The rich are getting richer
The gap between lower and middle-class families and the rich continues to grow. The wealthiest tranche of Americans saw their incomes grow 9% since the late '90s, while middle-class folks saw their paychecks gain 1.3%, and those in the lowest rung actually saw a decline of 2.5% during the same period, according to a report by the Center on Budget and Policy Priorities and the Economic Policy Institute.
In New York City -- home to legions of hedge fund managers and investment bankers with mind-blowing salaries -- the top 1% of tax filers took home one-third of the city's income, representing one of the nation's largest income disparities.
Investment banks hungry for Fed lovin'
Investment banks have been gorging on Bernanke's recent decision to open up the discount lending window to non-commercial banks. Investment banks recently averaged $38.1 billion in daily borrowings from the Fed. After Bear Stearns
Dating in the poorhouse
Recession thinning out your bank account? Credit crunch forced you to scale back your lifestyle? No worries. You're not destined to a lonely life of singlehood.
MSN put together a list of dating plans for the cash-conscious during these troubling times. Its plans include eating in, renting a movie, using coupons, and even proposing to move in together (I know you're poor, but didn't we just meet?). You probably never thought Ben Bernanke and dating tips could be mentioned in the same article, but it turns out the state of the economy can have a serious impact on your love life.
That's the latest for this week. Check back in next Friday for the latest economic roundup.
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