Is the economy really that bad? Sure, everyone knows oil is tearing a hole in our wallets, banks are struggling to tread water, the auto industry is in shambles, and don't even get me started on housing. But, really, where's the line between an economic downturn and an economic calamity? This week provided us with some answers.

Here's the latest from the economic front this week.

Problem No. 1: Housing
Those waiting for a housing rebound sometime soon might want to grab a drink. Friday brought news that foreclosure filings surged 120% from the same period last year, pushing 220,000 homes nationwide into bank ownership last quarter alone. Meanwhile, Congress is moving toward legislation that paves the way to insure up to $300 billion in rocky mortgages and gives the Treasury Department the green light to prop up Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE).

Problem No. 2: Jobs
Initial jobless claims soared to 406,000 last week, one of the highest readings since the post-Hurricane Katrina downturn. Companies announcing job cuts this week include United Airlines (NASDAQ:UAUA), Wachovia (NYSE:WB) and Bristol-Meyer Squibb (NYSE:BMY). Keep a watchful eye on employment; it might be a chief indicator of just how dire the economy gets. When consumers get caught in a trap of either losing their job or simply worrying they're about to lose their jobs, wallets slam shut and the engine that drives our economy -- consumer spending -- runs out of gas.

Problem No. 3: Tax woes
Here's an unsettling thought: What might become the next irrational bubble in the midst of a downturn? Tax revenue. As the economy flourished and property values ballooned, state tax revenue in the past years came pouring in. Now that the economic tides have turned, state budgets are projected to fall some $40 billion short this fiscal year. No problem, you say, tax shortfalls never seem to hurt the federal government, right? States are different, since most are required to balance their budgets each year. All things considered, there're two ways to close the gap: cut spending, or raise taxes. Both solutions, of course, could be detrimental to consumers already scrambling to make ends meet.

Problem No. 4: Oil and inflation
Oil began to back off its highs reached earlier this month -- a welcomed sight for many. Prices hovered in the low $120-a-barrel range at the end of the week, comfortably lower than the march towards $150 a barrel seen a few weeks ago.

Great news for those on a hunt to rein in oil speculators: a CFTC allegation shows an obscure company called Optiver Holding may have manipulated oil prices. Bad news, though: their alleged scheme was reportedly small and took place well over a year ago. Meanwhile, a federal task force reported that supply and demand fundamentals alone could largely justify oil at $130 a barrel. Excellent news if you're ExxonMobil (NYSE:XOM) or Chevron (NYSE:CVX), bad news if you're a consumer wishing for cheap gas to return.

Problem No. 5: Banks gone bad
Despite staging massive recent gains, the banking sector as a whole isn't out of the woods by a long shot. The Federal Reserve reported this week that banks notched up borrowing from its emergency lending window to an average of $16.4 billion per day. Banks will likely swoop in on the Fed's emergency window for two reasons: either they need the capital, or they think someone will raid them of what they already have, a la IndyMac. Neither is very encouraging.

That's the latest for this week. Check back next Friday for the latest economic roundup.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Fool has a disclosure policy.