BEHIND THE NEWS: Free falling economy

November 7, 2008 1:48:46 PM PST
The one thing we shouldn't do is panic. But dang it's hard not to feel anxious and worried about the collapse of the economy.

I'm not alone, I'm sure, about thinking twice -- or nine times -- about every dollar I'm spending. Or, as has been the case recently, not spending.

It's not how the economy is supposed to work, or grow, of course. This is all based on getting bigger every year. But now, during what seems to be a recession, we're shrinking.

Back when I was in college, the progressive thinking set focused on Zero Population Growth (ZPG), which asserted that the world was reaching maximum capacity in terms of people and resources consumed.

That morphed into a Zero Growth philosophy, which held that NOT growing would save the earth and its resources. There are many around the world who embrace that philosophy.

The United States economy is not at all based on that. Growth is what drives the machine, and without it, companies - and individuals - are considered less than successful.

Who knows, but maybe this current crisis will spark us to re-evaluate the whole concept of continuous growth? Perhaps, but don't count on it. So much of this society is now tied to growth every year.

Of course that's certainly not what's happening. The economy lost another 240,000 jobs in October. That drives the unemployment rate to 6.5 percent, the highest level since 1994. And it means there have been 1.2 million jobs lost since the beginning of the year.

That's frightening - for the people who lost their jobs, to be sure, but also for the people still working but wondering for how long.

We're seeing the slowdown especially in spending. Car companies today reported huge losses and, perhaps more indicative, reported they dipped into retained earnings by several billion dollars to keep themselves afloat. About $7 billion to be precise. It's hard to imagine the big three car companies in the U.S. staying in business much longer if this continues. Maybe why they're asking for at least $50 billion in federal bailout money. Hey, we bailed out the banks - so why would we stop there?

And take a look at the big retailers. I got a call from a guy I buy suits from at a department store. He told me my favorite line is being discounted by 40% this weekend. I asked him why. Because no one's coming in to buy clothes, he said.

Tonight at 11, we'll have the latest on the economy, and we'll have the latest on Barack Obama's plan to stimulate it, as he outlined this afternoon.

Speaking of the tough economy, Tappy Phillips and 7 On Your Side tonight has the story of some homeowners trying to beat foreclosure, and they're doing it by paying companies to negotiate better deals with banks and other lenders. But Tappy's story comes with a warning: there's no guarantee it will happen, as she shows us tonight. (See a preview here)

And I want to hear how you're coping with the downturning economy. Send me your tips for saving money, and how it's affecting your life. And please let me know if I can use your name. Click HERE.

We'll also have any breaking news of the night, plus Lee Goldberg's weekend AccuWeather forecast, and Scott Clark with the night's sports. I hope you can join Liz Cho and me, tonight at 11, right after 20/20.