A Dreary Forecast for the Economy

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WASHINGTON - All signs point to a recession - possibly a severe one, headed our way.

In fact, the U.S. may already be in one. The facts are all pointing to a spiral downward for the American economy.

Unemployment is now at 6.1 percent, but analysts forecast it could well hit 7.5 percent next year.

Manufacturing fell more than 2.5 percent last month - the biggest tumble in almost 30 years.

Click play to get Gordon Robertson's analysis following CBN News Correspondent Paul Strand's report.

The wildly gyrating stock market shows the fear and uncertainty among investors. And some see all those plans by the government to rescue the economy as wild flailing.

One observer said, "There is no direction to it, this up and down is hurting the economy."

Another said, "Someone needs to step in and actually assert some kind of accountability."

Mortgage rates have jumped more than half-a-point in a week, threatening to slow or halt the recent turn-around in the housing market.

With 15 banks having failed this year and all sorts of businesses likely to fail or shrink in the coming months, the credit freeze goes on as banks fear they won't get their money back if they lend it.

Senate Majority Leader Harry Reid says that puts the average businessman in a real bind.

"He saved money to go into business. He would like to be able to borrow some money - he's got good credit. But people aren't lending money now. They're simply not lending money," Reid said.

One bright spot for drivers - all this recessionary pressure is driving down the price of oil to less than half what it was a few months ago. And now gas has fallen down below $3 a gallon.

"We are the biggest user of oil in the world. People are driving less so that is going to take the gas down. You know OPEC is kind of losing its grip a little bit. There's too much oil out there," said Ira Eckstein, president of Area International Trading Corp.

Although that may bring some relief for now at the pump, it's also a sign of just how much oil traders fear a bad recession that will dry up demand for oil is just ahead.

Now OPEC is calling an emergency meeting, hoping to at least keep oil prices from falling any further - and maybe push them back up.

But investor Warren Buffett isn't letting all this scare him. He wrote a column in today's New York Times saying he's putting his personal investing into American stocks right now.

He says he's following a simple rule: "Be fearful when others are greedy, and be greedy when others are fearful."

He admits he doesn't know stocks will go up or down in the near-term, but is certain they're bound to go up - probably way up - in the long-term.

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Paul Strand

Paul Strand

CBN News Washington Sr. Correspondent

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