The trickle-down effect

Behind The News
July 29, 2008 1:46:10 PM PDT
Talk about snowballing. In an economy that is mostly driven by consumer spending, consumers aren't spending. And the so-called trickle down effect becomes an avalanche. Live by the dollar, die by the dollar.

And in an economy that is still officially not in a recession, it sure sounds like we're in a recession.

(Remember, the historical definition of "recession" is two consecutive quarters of negative Gross Domestic Product "growth," and we haven't had one quarter of it yet, officially. Maybe it's time to redefine the definition?)

Consider these stats that came at us rat-tat-tat today:

The federal budget deficit is now at nearly half a trillion dollars. A senior Bush Administration official blamed the record deficit on a sagging economy and, oh yeah, the supposed stimulus tax rebates made to 130 million households. Just so I get this right: billions in rebate checks to help the country not fall into a recession, and the economy is still tanking and the deficit is worse than ever?

By the way the deficit - which reportedly tops $482 billion - surpasses the previous record of $413 billion, set in 2004. The Bush White House Response? Well, it wasn't the biggest deficit in terms of percentage of GDP.

And what's the old saw about the bad stuff flowing downhill? The states and cities are downhill.

New York Gov. David Paterson says the state faces its worst fiscal crisis in more than 30 years - and he'll say as much tomorrow night in a somewhat unusual 5 p.m. speech, that we'll air during Eyewitness News and on

Paterson says a huge drop in state revenues means dramatic cuts in state services, layoffs of state employees and other painful cost-cuttings.

And, continuing the downhill flow, Mayor Michael Bloomberg says New York City is going to have to cut back as well, because of a $2.3 billion budget gap. (The same Mayor who insisted that New Yorkers get a $400 property tax rebate.)

It stops going downhill with the rest of us, of course, who wonder how to pay for necessities that keep rising in price.

Not the best of news to return after a week off, but it is the news nonetheless. And we'll have the latest on the economy, and its downhill flows, tonight at 11.

Also at 11, we'll have the latest from the campaign trail -- back in the U.S. again. And the news includes medical: A mole removed from John McCain's face, the same face that has been fighting melanoma all this decade. And a bad hip on Barack Obama, an injury caused by playing basketball we're told.

We'll also have any breaking news of the night, plus Lee Goldberg's AccuWeather forecast (torrential enough for you last night?) and Scott Clark with the night's sports.

I hope you can join Liz Cho and me, tonight at 11.