Economist

WASHINGTON - As bad as yesterday's grim government report on economic growth was, it points to even worse times ahead. The collapse of exports, industrial production and the inability of companies to sell their products all portend an even deeper contraction as the U.S. and global economies sink further in the weeks and months ahead. The Commerce Department reported that the U.S. economy contracted 3.8 percent in the final three months of last year, the biggest such quarterly shrinkage in almost 27 years.

WASHINGTON - Bad economic news just keeps piling up. Yesterday alone, three new milestones were reached: The number of workers filing unemployment claims hit an all-time high, sales of new homes reached an all-time low, and production of durable goods fell for the fifth straight month, boosting inventories to the highest level since the government began to keep count in 1992. And it's not over. Today, when the Commerce Department releases its initial estimate of gross domestic product - that is, the value of all goods and services produced by the economy - for the fourth quarter of last year, it will essentially wrap into one, sobering number all the grim developments that have been accumulating in recent weeks and months.

I was talking to a friend who is a travel agent, making plans to visit my son and his new wife this spring at their new Marine Corps duty station in California, and I asked if I should hold off buying my plane tickets in hopes that the prices will fall further. My friend said she'd watch prices for me but that I shouldn't wait too long. Prices will rise with demand, she said, and by spring she expected people to be traveling again. "We are going to be tired of saying we are poor," she predicted.

With jobs disappearing in numbers not seen since the end of World War II, pressure mounted on Congress and President-elect Barack Obama yesterday to reach agreement on a recovery program to stave off economic catastrophe. The nation's unemployment rate rose to an eye-popping 7.2 percent in December and brought the total jobs lost for the year to the largest number since 1945, the Labor Department said. More alarming than the bare numbers was the trend line: The economy lost 2.6 million jobs in 2008, but 1.9 million, or about 75 percent of them, vanished in the past four months.

Tumbling gasoline prices gave consumers more purchasing power last month, which led to a rise in real consumer spending even as personal income slips and Americans worry about their jobs in a rapidly weakening economy. The Commerce Department reported yesterday that consumer spending, when adjusted for inflation, rose 0.6 percent in November, its largest gain in two years. The increase followed a 0.5 percent decline in October. And while the unadjusted rate of consumer spending declined 0.6 percent in November, on the heels of a 1 percent drop in October, economists suggested that the relative increase in spending was a rare piece of good news for the faltering economy.

Home sales declined sharply last month, and housing prices posted their deepest decline in four decades as a rapidly slowing economy discouraged many potential buyers from tip-toeing into the market. Sales of existing homes declined 8.6 percent last month, to a seasonally adjusted rate of 4.49 million, according to the National Association of Realtors, a trade association. The median price of a home fell 13 percent in November, to $181,300 from $208,000 a year ago. That was the lowest price since February 2004.

It is rather haunting, the notice above the Flush button in the toilet on the airliner, "Do Not Flush While Seated On Toilet." One imagines the engineers of the toilet running tests with flush dummies with big flat butts and the suction ripping the stuffing right out of them, and the engineers thinking, "Oh criminy, you mean we wasted three years on this sucker?" So lawyers were brought in to write the warning, which had to be short enough to be printed in large type so that geezers would see it, who are the ones most likely to flush while seated.

Friday marks 75 years since repeal of the Volstead Act, which made the manufacture, distribution and consumption of alcoholic beverages illegal in the United States. As the anniversary of the end of Prohibition approaches, modern advocates of a similar repeal are calling again for the decriminalization of heroin, cocaine and marijuana - and this time they've come packing a money argument by a Harvard economist. I like money arguments. They are usually a lot more effective than emotional ones or those that exploit stubborn prejudices with the intent of maintaining the status quo. As the American economy recedes, state and local tax revenues fall and government budgets are cut, the money argument for changing the way we do things - from enforcing the laws to educating children - makes the most sense and has the strongest appeal.

Baltimore's heavy-handed use of eminent domain and persistently high property taxes have forced residents and businesses to flee the city in the last half-century and contributed to the decline of neighborhoods, a Loyola College economist argues in a report published yesterday. Stephen J.K. Walters, in "Baltimore's Flawed Renaissance," writes that the city's pervasive poverty, high crime rate and decaying housing is a direct result of "hostility to private property rights and a resulting flight of capital that has largely drained the city of its economic lifeblood."

You've known it. You've probably known it for months. But the official measurements are finally catching up, reflecting the increasing economic pain that many Americans are feeling. The unemployment rate rose 0.5 percent in May, to 5.5 percent, the biggest one-month jump since early 1986, the federal government said yesterday. Continued job cuts are putting adults out of work and leaving in the lurch many teenagers looking for summer income. Meanwhile, net worth is falling as people's homes lose value.