by Ms. C. Jones

Created on: January 03, 2009   Last Updated: January 04, 2009

US citizens are losing their jobs at an accelerated rate. Is the same thing about to happen to their lines of credit? The answer is yes. With so many Americans already losing their jobs, the economy is about to spiral downward because seventy-five percent of its power is derived from consumer spending.

The entire US economy weakened across all regions since October because it became tougher to get loans and the demand for credit has started to shrink. The US Federal Reserve stated that bank policymaker are going to meet to consider changing interest rates. There have been considerable changed in retail sales, tourism, manufacturing and both the residential and commercial real estate sectors have weakened significantly.

The US economy is in a recession and the recession is becoming deeper and wider than anyone had imagined. The USA has been in a recession for the last year. There subprime housing crunch may just be the beginning of the financial crisis. There will be many other sectors that will send the US even deeper into a recession. Out of the last ten recessions since the Great Depression, only two have lasted for more than a year. But this recession is going to be painful and may well last to the third quarter of 2010.

To fully understand why this is taking place, let's look at employment statistics. The unemployment rate jumped to 6.5% in November, according to the Bureau of Labour Statistics. There have been declines of more than 1.3 million jobs in the first ten months of 2008 and even more in the last two months. Approximately 250,000 jobs were eliminated in November and December, although the final statistics are not yet available. That would bring the total jobs losses up to 1.6 million(approximately).

This is the first recession the USA has experienced since 2001 and companies are reducing their work forces in larger numbers than in 2001. Banking, business services and manufacturing have all been hit very hard.

As corporate profits continue to slide, the US unemployment rates will rise and the economy is going to get much worse before it gets better. Corporate profits are expected to plunge and estimated 25% and profits can decline as much as 10%. Some of the most stable companies in the world have been affected by the world wide recession. Toyota has shown it first loss since 1938.

In the first quarter of 2009, the gross domestic product will decline by 5.0% in the first quarter and 3% in the second quarter.

If consumers lose their credit lines, the economy

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