The Daily O’Collegian

Last week government agencies released several key          economic metrics and the picture they paint of the economy is not optimistic.

The Labor Department reported an increase in unemployment equivalent to a loss of 63,000 jobs in February. NPR reported that the number represents “the worst monthly job losses in five years”.

In addition, the Commerce Department reported an increase in retail sales. While an increase in sales seems like it would be positive, sales  increased at a nominal level, not in a real sense.

“If not for the rising cost of necessities such as food, gasoline and health care, consumer spending would have been flat in January and December,” a recent AP business article reported.

Last week President Bush ended his denialist attitude toward a recession, admitting “it’s clear our economy has slowed.” This acknowledgment comes late, since Wall Street greats like Warren Buffet have already declared that the economy is in a recession.

Since the promised tax rebates are months away, much of the pressure for dealing with the economic downturn has been placed on the shoulders of the Federal Reserve.

Since the Fed’s attempts at dealing with this recession have so far been ineffective, further cutting interest rates would seem to only cause more harm to the economy.

Although the Fed is trying to create more liquidity in the market, they have so far been responsible for the devaluation of the dollar.

The rising cost of goods has more to do with the declining dollar than economic fundamentals.  Oil prices will continue to hit record highs not simply because of limited supply and immense demand, but due because of inflation.

The faltering job market and the recognizable inflation combine to create a very disturbing economic phenomenon known as stagflation.

Although the excessive stagflation levels that existed under the Carter administration are unlikely to reappear, there are fundamental economic issues not being addressed even by the forthcoming tax rebates.

The economy is not going to be helped in any real capacity by handing out money that doesn’t exist.

The recession, along with continuing budget and trade deficits and the ever increasing national debt, shows that a major issue in stabilizing the economy is simply  addressing irresponsible spending that provides no benefit to Americans.

If the current administration is unwilling to handle the irresponsible spending it has encouraged, it will only drag Americans down with it.

The longer it takes to provide proper economic actions, the deeper and more pronounced the recession will become and the effects will linger into the future.

For example, it is not just mortgage markets that are affected by excessive foreclosures. Faltering housing markets mean less property tax revenue for public schools that often already have to deal with inadequate budgets.

Quality public education is essential for sustaining the prosperity that made America great and there is much that needs to be done to secure it.

Often the economy may seem like an abstract concept that has little to do with anyone personally, but if the effects of this recession are not countered in a meaningful way, the devastating reality of a declining economy will be obvious.