As Wall Street Posts Sharp Losses, Washington Promotes 'Stimulus Package'

Analysts attributed the market’s plunge to fresh indications that the US economy is sinking into recession and the growing conviction that the government is powerless to stop it. A report issued by the Philadelphia Federal Reserve Bank Thursday showed factory production in the region contracting far more sharply than anticipated. The study’s manufacturing index fell by 20.9 percent—compared to a 1.6 percent fall-off the previous month—hitting the lowest level since October 2001. The Philly Fed report has served as a barometer of manufacturing activity nationwide, and financial analysts saw the figures as the clearest signal yet that the US is on the brink of or already in recession and that the tightening credit squeeze is spreading beyond the beleaguered housing market to the core of the US economy. Also fueling the sell-off was the congressional testimony of Federal Reserve Board Chairman Ben Bernanke Thursday. Appearing before a House budget panel, Bernanke delivered a largely boilerplate assessment of the economy, acknowledging slower growth while insisting that the Fed was not forecasting recession. He also assured lawmakers that the Fed would not “ignore” inflation, responding to a Labor Department report this week revealing that wholesale prices shot up 6.3 percent in January, the biggest increase in 27 years. http://www.countercurrents.org/damon180108.htm

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