Chronic slump: Most signs still point to a struggling economy

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The Federal Reserve Board met earlier this week and took action based on analysis that the U.S. economy is still in a slump.

The good news Wednesday was that the federal deficit for fiscal 2013 was $680 billion, lower than the past four, each of which was more than $1 trillion. It is still bad news since it increases the national debt, which now stands at $17.1 trillion. Some economic advisers are talking about letting inflation rise, which would help pay debts. But that would be another attack on America's middle class, whose pay would lag behind rising prices.

The merely temporary resolution of the government shutdown and debt ceiling crisis that Washington subjected Americans to last month continues to cast a pall over economic activity. The Fed announced Wednesday that the $85 billion in bond purchases it makes per month, called "quantitative easing," will continue so that new money is poured into the economy. Its continuation, however, is becoming an addiction for Wall Street and American banks.

In the meantime, September's job creation figures were a pallid 148,000, around the minimum required just to absorb new entries into the job market. Even that positive figure was not enough to put a small dent in the number of Americans -- 11 million -- seeking employment.

On trade, the United States hit a deficit of $208 billion with China, up $5 billion from a year ago in spite of a weaker U.S. economy. There isn't much to be expected from trade with Europe either. Figures Thursday showed that unemployment in the 28-nation European Union has risen to 11 percent and, in the euro currency zone, to 12.2 percent, in spite of modest improvement in Spain, a convalescent economy.

In short, Americans have little reason to expect much recovery in the near future. October's figures will, of course, reflect the full impact of the government's 16-day shutdown.

The bombs planted in the economic road for Jan. 15, the next budget deadline, and Feb. 7, the next debt ceiling crisis, even though some Republicans have promised not to detonate them, impede the confidence that investors, bankers and operators of companies require to move forward to create jobs and strengthen the economy.


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