US stumbling towards even deeper economic misery

Economists are suggesting that the US is staring at the longest recession in 25 years and that will be despite the decision before congress taking forward the $700 billion rescue plan put forward by Treasury Secretary, Henry Paulson.

The Standard & Poor’s 500 index plunged 8.8 percent yesterday, which represents the biggest fall since 1987.

Chief economist at Moody’s Investors Service John Lonski said that interest rates should and will be cut as financial institutions are cutting their forecasts.

Morgan Stanley has cut its forecast for the third-quarter whilst Deutsche Bank’s also reduced theirs following the fall in consumer confidence and spending.

Consumers are feeling the pinch at the moment to the extent that they are choosing non-branded products in order to reduce their weekly food bill.

The decision following the rejection of the bailout plan has caused shockwaves across the globe as Australian shares were sent tumbling following the decision.

Prime Minister Kevin Rudd said it was a “worrying time” for global financial markets however he was keen to stress that the Australian financial markets, economy and banking sector were still in stable shape and that the Reserve Bank of Australia would take action if required.

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