Keeping track of the economic news is getting nerve-racking - akin to watching a train wreck in slow motion.

In the past 24 hours we've seen . . .

- A Fortune magazine study showing that about 75% of Americans who think we're either already in a recession or are heading toward one (no surprise to me -- we in the media have been scaring people half to death over the economy over the past year. That sentiment has now taken hold among consumers in a self-induced prophecy. The trouble is, about two-thirds of the economy relies on consumer spending. So if Americans pull back financially, we really could fall into a recession).

- An amazing interview on CNBC last night between "Mad Money" host Jim Cramer and Donald Trump. In it, The Donald alternated between touting a "great investment environment" within three months to the U.S. sliding into not a recession, but a depression.

- The announcement of a fiscal stimulus package from the White House, totaling $150 million in tax rebates, loans, and other aid packages to lower-and-middle income Americans. Wall Street watched President Bush's speech on the stimulus package, shrugged, and sold more stocks. I think even Wall Street is finally realizing there isn't much government can do to sway the economy one way or another.

-- Also news from the Financial Times on the impact that the economic crunch is having on the technology sector. Comparing things to 2001's nasty tech recession, the FT says that Wall Street took fright at a cautious forecast from Intel and braced for the fall-out from an economic slowdown in the US, the technology sector’s biggest market.

There was some good news amid the carnage. "Executives like these brush off comparisons with the last tech downturn. One-off factors, such as fears about Y2K and over-inflated promises during the internet bubble, distorted the picture then, said the Times. “People hyped up the next generation of software,” he said.

Tech executives also point to their broader diversification. While emerging markets represent 10-15 per cent of the revenues of most big tech companies, they have come to account for a far larger part of their growth.

"Yet a tighter economy could still expose those companies that don’t have the product mix, global reach or variable cost structures to withstand falling IT budgets and consumer spending in the US – even if an economic slowdown doesn’t spread more widely," said the paper. "The stock market has already cast its votes, handing the tech sector – which normally enjoys a January rally – its worst new-year start for years."

The PC and microchip sector are getting blasted the most. A boom in PCs is expected to cool this year, the paper reports, pushing shares in Hewlett-Packard and Dell each down by 16 per cent. And profit-taking has hit high-fliers like Apple (off 20 per cent) and Research in Motion (26 per cent).

I don't know about anyone else, but I'm going home this weekend and having a stiff drink. Because, finally, the recession squad has what it's wanted -- the ingredients for a deep and wide economic downturn here in the US are all present and accounted for.

Another major factor in pulling countries into a recession is politicians stating that things are going well with the economy while people are getting hit in their income and see their spending power reduced by skyhigh inflation.

This is not so much the case in the US maybe, but in several European countries the economy is growing still while consumers are getting less and less spending power due to tax hikes.
As a result they are rapidly loosing what trust they have in the economy, spending is slowing down, and the economy is cooling.
The only thing preventing economic collapse at the moment is the price increases in necessities like food and clothing. People are having to spend a lot more money on those, forcing them to spend every cent they have rather than putting it into savings accounts or safety deposit boxes for the future.

If at the same time they see politicians get ever more lavish salaries (as is the case here, where the cabinet decided to give themselves a 30% raise while at the same time urging companies and labour unions to not increase salaries by more than 2-3% to prevent the economy from getting too hot) things only get worse.

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