The FDIC is looking for a “few good men”….
Well, this is a harbinger of things to come. As outlined here in the Wall Street Journal, the FDIC is looking to ramp up employment in preparation of an increase in the number of bank failures in the near future. That means we can look forward to more media “doom and gloom” about the economy and continued talk of “recession”.
In case you’re not familiar with the definition of “recession”, you can learn more here. In plain terms, a recession is 2 or more successive quarters of negative economic activity. Just so you know, the US economy hasn’t been in recession since November, 2001! Of course, you wouldn’t know that by the way the media talks about “how bad” the economy is.
Here’s how it ties together: our economy is completely reliant upon consumer spending, with about 70% of our economic activity tied to it. There’s a good reason why our economy is called a “service” economy! When people continue to hear “how bad things are” they stop spending because not spending is completely rational based upon what we hear on the news and read in the papers or online.
When people stop spending, economic activity slows (duh!) and it becomes a self-propagating, negative feedback loop. Why else would a government give us back our own money via a “stimulus package“? They’re hoping we spend the money because spending it lowers the risk of recession.
Ain’t macroeconomics grand?