WASHINGTON, October 16, 2008 (AFP) – With recession fears for the US economy growing by the day in the wake of a global financial crisis, analysts are pondering the questions of how deep and how wide the downturn will be. Reinforcing those fears, the Commerce Department reported that US retail sales — a key to economic activity — slumped 1.2 percent in September, the sharpest drop since August 2005 and weaker than market expectations.
“People have dropped shopping. This happened even before the total meltdown in the stock markets. What is ominous is that the declines in spending were broad-based,” said Joel Naroff at Naroff Economic Advisors.
Naroff said it is only a matter of time before the recession becomes official.
“The real issue is how long this will last and how deep a slump will it be,” he said.
“The answer to that is not clear as it depends upon how fast the rescue plans that have been announced are actually implemented and work. That is likely to take time.”
John Ryding at RDQ Economics said the latest reports show recessionary levels for both the consumer and manufacturing activity, an ominous sign for overall economic output and a sharp drop in gross domestic product (GDP).