A synchronized sink like this hasn’t occurred since the oil shocks of the 1970s. This time the chief causes are the bursting bubbles of high tech and the global stock-market bust. Officials everywhere have been banking on America to resume its accustomed role as global locomotive. U.S. production had slid from a dazzling 5 percent growth rate a year ago to a dismal 0.2 percent this spring. But employment and consumer spending remained solid, sustaining hopes for a recovery by autumn. Now, it’s in doubt. The United States lost a million jobs in August, pushing unemployment from 4.5 to 4.9 percent–one whole point within a year, which has never happened except during periods of official recession.
Small wonder that U.S. and world stocks plunged to their lowest levels in three years. Meanwhile, news elsewhere was no less bleak. Japan’s troubled economy sank by a rate of 3.2 percent in the second quarter, raising the prospect that it would subside into its third recession of the decade. And Japan’s banks are so shaky that the IMF, worried about the possible ripple effects of a crash, announced it was undertaking an unprecedented inquiry into their finances. Bad tidings sounded from Britain, Italy and Germany, too, suggesting that overall “growth” in Europe is heading for about zero. “Recession” may ultimately describe the cascade of accelerating events too kindly.
