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Broader Measure Of Unemployment Hits 16.5% In June

Earlier today, the Labor Department announced the U.S. unemployment rate rose to 9.5%, a 26-year high. Nonfarm payrolls shrank by 467,000. Could America’s labor woes possibly be any worse?

You bet.

This morning, Phil Izzo of the Wall Street Journal’s “Real Time Economics” blog wrote:

As job losses accelerated in June, the unemployment rate ticked up 0.1 percentage point to 9.5%, the highest level since August 1983.

But another more comprehensive gauge of unemployment also continued to tick up. The government’s broader measure, known as the “U-6″ for its data classification, hit 16.5% in June, 0.1 percentage point higher than March.

The comprehensive measure of labor underutilization accounts for people who have stopped looking for work or who can’t find full-time jobs. The index had posted a 0.6 percentage point jump in May. The pace of increase has begun to mirror the rise in the headline rate after soaring at higher pace earlier this year, possibly signaling that more workers are starting to look for jobs again.

Though the pace may be moderating, the figure still is the highest since the Labor Department started this particular data series in 1994. It’s also above a discontinued and even broader measure that hit 15% in late 1982, when the official unemployment rate was 10.8%. (That data series goes back to the 1970s.)

Painting an even bleaker picture, Izzo added:

Many forecasters expect the official unemployment rate to top 10% by the end of this year. The two indexes have begun to move closer in tandem as improving sentiment amid widespread talk of “green shoots” of recovery were bringing job seekers back to the market. However, this month that trend appears to be reversing as the participation rate declined.

Meanwhile, the number of long-term unemployed continues to rise, with 4,381,000 out of work for over 27 weeks, up from 3,948,000 last month. If those job seekers continue to be discouraged and stop looking for work they won’t be counted in the headline unemployment number. However, the broader jobless rate would move higher, and could easily top 18%. For people in this group, comparisons to the Great Depression (when 25% of Americans were out of work) may not look so wild even if overall economic activity is holding up better.

Source:

“Broader Unemployment Rate Hit 16.5% in June”
Phil Izzo
Wall Street Journal (Real Time Economics Blog), July 2, 2009

Quotes For The Week

“On Wall Street, there’s nothing like overcharged young men, or overcharged young women either I’m sure, that will lead you to losses through inexperience and exuberance. When I was a young investor on Wall Street I thought I knew everything. I learnt the hard way that I did not know everything. But you know, it’s hard to tell that to a 24 year-old or even a 34 year-old sometimes.”

-Legendary investor Jim Rogers to CNBC staff last week

“The stimulus is so great in the United States, China and the United Kingdom, it will kick the economy up. GDP will go back positive for two to three quarters. They’ll assume everything is settled, that throwing money at it has worked. But the long-term imbalance between overproducers [like China] and overspenders [like the U.S.] will continue. It’ll be a multiyear drag on growth…

If the problem is that we consume too much and borrow too much, does it make sense to borrow more and spend more? It doesn’t make sense to solve alcoholism by giving an alcoholic a quart of whiskey, but everyone believes that we must stimulate. So that’s why we feel this is a temporary cure. This is like when you revive the drunk, he staggers down a few blocks, then falls down again…

We’re not rich, and we’re undersaved and underpensioned. Those will be a real brake on economic growth. This will be a pretty long recovery period, longer than we’re used to, but hopefully not as long as Japan took. It will not be as long as the Depression, but it will be several years, and not just two. Lord knows we have had several fat years…

President Obama is not doing the right thing. I admired his appointments in many areas, certainly in the environmental area. But then he got these tired old retreads from the financial area that notoriously didn’t blow a whistle over the last few years. They’ve all been Rubin-ized [influenced by former Treasury Secretary Robert Rubin].”

-Well-known money manager Jeremy Grantham, in a recent interview with SmartMoney magazine that appeared on their website last week.

Robert Prechter Sees Stock Plunge, Deflationary Depression

If Marc Faber’s prediction that the U.S. government will go bust didn’t start your weekend off on a positive note, how about Robert Prechter’s forecast that U.S. stocks will plummet in advance of a deflationary depression? From Reuters (UK) yesterday:

Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.

Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that’s akin to the Great Depression, he said.

The U.S. S&P 500 stock index’s rebound by nearly 40 percent since it sagged to a 12-year closing low of 676 points on March 9 is not sustainable, Prechter said in an interview with Reuters.

“It’s not the start of a new bull market,” said Prechter, chief executive at research company Elliott Wave International in Gainesville, Georgia. “Our models are (showing) right now that it is a much bigger bear market than most people realize, something along the lines of 1929-1932,” he told Reuters in a wide ranging interview. “It’s a very rare event,” he added.

“I think the next leg down will be at least as severe if not more severe than what we just experienced. So you want to stay on the side of safety,” he said.

As in his 2002 book “Conquer the Crash,” which warned of the dangers of a U.S. debt bubble and deflationary depression, Prechter continues to advocate safer cash proxies such as Treasury bills…

“Deflation is coming, it’s going to lead to a depression. We’re not at the bottom yet,” Prechter said. “I think we are going to have bouts of deflation separated by recoveries.”

Source:

“Stocks still face deflationary collapse: Prechter”
Haitham Haddadin, Ellis Mnyandu, and John Parry
Reuters (UK), May 14, 2009

Gerald Celente: Green Shoots Will Wither As ‘Greatest Depression’ Approaches

“Bernanke sees ‘green shoots’ of US recovery”

-AFP, March 15, 2009

“Bernanke’s Green Shoots Seen By Markets”

-New York Post, April 30, 2009

“Keeping a Close Eye on Those ‘Green Shoots’”

-Voice of America, May 7, 2009

It’s been some time since I last posted about Gerald Celente, a trends researcher and director of Kingston, NY-based Trends Research Institute. Celente, who is said to have correctly forecast the subprime mortgage crisis, the dollar’s decline, and gold’s rise, also predicted a “Panic of 2008,” where he said the subprime fiasco would be the first “small, high-risk segment of the market” to collapse, along with derivative dealers, hedge funds, buyout firms, and other market players. The “Panic” would also result in massive corporate losses and a lower U.S. standard of living.

Celente wrote a piece that appeared on the Rense.com website on May 7, and argued that despite the “green shoots” being talking about in financial circles, we are still on the verge of “The Greatest Depression.” Celente said:

The financial fields replete with sprouting “green shoots” should be viewed with suspicion, if not alarm, warns Gerald Celente, The Trends Research Institute Director. “They are not a mirage, but they are ephemeral.”

“‘Green shoots’ may sprout,” said Celente, “but they will not flower. The economy cannot be coerced back into growth with tons of money manure.”…

“Green shoots” can only be brought to harvest through real productivity. Pumping gigantic sums of money into too-big-to-fail financial institutions to jump-start the lending/borrowing cycle is to perpetuate a failed economic model. (See “The Greatest Depression,” Trends Journal, Winter 2009.)

Celente, who specializes in analyzing world-shaping events and forecasting tomorrow’s trends, painted a bleak picture for the U.S economy. He wrote:

Trendpost: With so much money being dumped into the system, there will be money to made … and lost. The agile and the knowledgeable may be able to reap “green shoots” while they’re sprouted. But beware!

“The Greatest Depression” — that we forecast would begin to set in by the end of this year — may have been postponed, but it has not been averted. When it does set in, it will do so with enhanced intensity and at a pace accelerated by complex financial finagling … all under the guise of nation-saving action. Rather than let the failing industries fail and the failed banks go bankrupt, the government is deliberately bankrupting the nation.

The lesson to be learned from the financial crisis that began in the summer of 2007, is that nothing succeeds like failure. The greater their failure, the bolder they become. The more they lose, the more they take. The greater the chaos, the more control they exact. The bigger they fail, the harder we fall.

No act is too unthinkable or measure too draconian for the Washington-Wall Street Mob to concoct in order to maintain power, make money and cover their losses. While it is impossible to second-guess what the government will do next, it is absolutely certain that they will stop at nothing.

The “green shoots” will wither and conditions will deteriorate. Those who are prepared for the worst will not have been taken by surprise.

Source:

“Green Shoots Or Greatest Depression?”
Gerald Celente
Rense.com, May 7, 2009

Jim Cramer Says Depression Over, Expects New Bull Market

Have you heard the latest prediction from CNBC television personality and best-selling author Jim Cramer? From Jeff Poor of the Alexandria, VA-based Business & Media Institute last week:

It came and went – and some might not have even noticed it – despite the seriousness of its use. On April 2, CNBC’s Jim Cramer proclaimed the Depression over.

Throughout that day, the “Mad Money” host told viewers of MSNBC’s “Morning Joe,” CNBC’s “Street Signs” and finally on his own program that the Depression was over and that we were on the verge of a bull run for the financial markets.

“We have reached the land of a thousand bull dances – phoney maroney, why? Because the market swallowed its Prozac,” Cramer said on CNBC’s “Mad Money” April 2. “And right now, right here on this show – I am announcing the Depression over!”

FREE FINANCE/INVESTING PUBLICATIONS for qualified readers!

Poor pointed out that the former hedge fund manager credits rhetoric from U.S. President Barack Obama for the predicted turnaround in the economy and financial markets. From the piece:

“And then today, we got the second big positive – President Obama praised, what did he praise? The stock market! This is a total 180 from his position a few months ago. You got to admire a president who can change his mind, especially after eight years of George W. Bush’s laissez-faire philosophy – that almost led rapacious late-stage capitalism to devour itself.”

Cramer attributed his new bullishness to a change in Obama’s rhetoric from proredistribution to pro-stock market.

“The Depression is over and now we have a president who has gone from bear-in-chief to bull-in-chief, and that’s why we now like him,” Cramer said. “He’s change his genus, if not his phylum. We keep ours and now Obama knows if he kills your 401(k), IRA and 529 plan, he can’t make it up by taking some money from the rich and just giving everybody a G or two.”

Eveblast.tv Video Link

Time will tell, right folks? I’m still waiting to see if Jim Cramer’s prediction that the U.S. housing market will reach a bottom by June 30, 2009, pans out. Although, I must admit, I’m somewhat skeptical about Cramer’s abilities as a financial prophet. Reason being? Who remembers this classic? Back on July 30, 2008, Cramer said:

I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15, and I think anyone out there who’s waiting for that low to be breached is in for a big disappointment and [they’re] missing a great deal of upside… Stop waiting, buy the next dip because I think it might be the last big one.

For the record, the Dow Jones Industrial Average closed at 10,962.54 and the S&P 500 at 1,214.91 back on July 15, 2008.

Today (April 6, 2009), the Dow stood at 7,975.85 and the S&P 500 at 835.48 at the end of the trading day.

Source:

“Cramer Declares End of ‘Depression’; Credits Obama’s Rhetoric, not Actions”
Jeff Poor
Business & Media Institute, April 3, 2009

Comparison: U.S. Recession Versus The Great Depression

Yesterday, the Wall Street Journal’s Justin Lahart wrote a piece which compared economic output, employment, and consumer prices in the current U.S. recession with that of the Great Depression.

Lahart included the following chart to illustrate this comparison:

Source: Wall Street Journal

Lahart wrote:

In the wake of the biggest financial shock since 1929, economists say the odds of a depression are less than 50-50 — though still uncomfortably high. But even if a depression comes to pass, a 21st-century version would look very different from the one 80 years ago…

The different structure of today’s economy means that a modern depression would differ from the Great Depression of the 1930s. Fewer than 2% of Americans working today have agricultural jobs, compared with one in five in 1930. Three-quarters of today’s workers are in service-related jobs, which tend to be more stable than manufacturing, compared with fewer than half in 1930…

Today’s cutbacks would be for more discretionary purchases — cable television, iTunes songs and restaurant meals.

I have to disagree with Lahart. I think he is underestimating the potential danger at hand. A 21st century economic depression could still end up looking a lot like its famous predecessor. I have a feeling this game is still in the early innings, folks. Because Uncle Sam and the Fed are throwing everything, including the kitchen sink, at the financial crisis, I wouldn’t be surprised to see a “bounce” in the economy sometime soon. At the same time, the house of cards that is the U.S. financial system will have become more unstable (think of all that new debt), and, with their ammunition (think interest rates) running low, what will Uncle Sam and the Fed do for an encore once the effects of the stimulus wear out? Once can only pray for sustained economic growth at that point, which still leaves the U.S. in a precarious financial situation. And if the plot fails? Well, all those financial imbalances we keep making worse through our “stimuli” and “bailouts” could turn a hard landing into a much more painful crash landing.

As I like to say, hope for the best, prepare for the worst.

Source:

“How a Modern Depression Might Look — If the U.S. Gets There”
Justin Lahart
Wall Street Journal, March 31, 2009

Related Post

From our sister blog, Investorazzi.com, today:

“George Soros: Great Britain May Require Financial Rescue”

He was not optimistic about the G20 meeting, saying the odds were that it would fail because there were so many differences of opinion. The price could be years of economic devastation worse than the Great Depression. “It is really a make-or-break occasion.”

Quote For The Week

Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body- the producers and consumers themselves.

-Herbert Hoover (31st U.S. President. 1874-1964)

Stop Me If You Think You’ve Heard This One Before

What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.

-U.S. President Barack Obama, during an appearance with British Prime
Minister Gordon Brown this past Tuesday

The Wall Street Crash of 1929 was marked by an initial collapse on Thursday, October 24, 1929, with subsequent downturns on Monday, October 28, and Tuesday, October 29. The carnage on the Street would continue for the next month. With broader effects lasting for years…

We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.

- Goodbody and Company market letter, as quoted by the New York Times, October 25, 1929

Buying of sound, seasoned issues now will not be regretted.

- E.A. Pearce market letter quoted in the New York Herald Tribune, October
30, 1929

This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.

- R.W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

I know that we did the right thing.

-U.S. President Barack Obama, during an Ohio police academy graduation
earlier today

I am convinced that through these measures we have reestablished confidence.

-U.S. President Herbert Hoover, December 1929

If we can summon that spirit once more, if we’re willing to look out for one another and listen to one another, if we are willing to pull together and do our part, if we can show even a fraction of the courage and selflessness that these cadets have already demonstrated, then I have no doubt that we will emerge from this crisis stronger than before and keep this nation’s dream alive for future generations.

-U.S. President Barack Obama, during an Ohio police academy graduation
earlier today

While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.

-U.S. President Herbert Hoover, May 1, 1930

Some would say the Great Depression didn’t end until America’s entry into World War Two, eleven-and-a-half years after President Hoover’s statement in the spring of 1930…

Trends Expert Says The “Greatest Depression” Is Upon Us

We’ve already experienced one blast from the past in David M. Walker today. How about one more, for good measure? Does anyone remember me talking about Gerald Celente some time ago? Like Walker, he’s in the headlines these days too. This is what I wrote about Celente on November 26, 2007:

Not surprisingly, the following story wasn’t picked up by the mainstream financial media. Back on November 19, UPI reported that Gerald Celente, trends researcher and director of the Trends Research Institute, told the Hudson Valley Business Journal (NY) that the United States is headed towards “The Panic of 2008,” where a financial crisis will send the U.S. dollar tumbling as much as 90% and the price of an ounce of gold soaring to $2,000. Celente told the paper:

We are going to see economic times the likes of which no living person has seen… The bigger they are, the harder they’ll fall.

Celente, who correctly forecast the subprime mortgage crisis, the dollar’s decline, and gold’s rise, said that the subprime fiasco was just the first “small, high-risk segment of the market” to collapse. He predicts that derivative dealers, hedge funds, buyout firms and other market players will also unravel. Massive corporate losses will also be an integral part of the “Panic,” which will result in a lower U.S. standard of living.

Okay, so Celente was wrong about a dollar crash and gold skyrocketing (at least in 2008), but he’s off to a good start with the remainder of his forecast.

So what’s the trends researcher saying these days? Plenty. He wrote on HoweStreet.com Monday:

The “Greatest Depression” that the Trends Research Institute forecast, well before Wall Street or Washington would acknowledge recession, is upon us.

The global financial markets are collapsing. All the pundit’s cautious predictions and business media’s hopeful expectations at the New Year for an economic turn around and imminent market bottom were dead wrong. There will be no turn around in the second quarter of 2009 or 2010 or 2011 … America and much of the world has entered the “Greatest Depression.”

The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill and will not be coaxed into remission by stimulus packages nor restored to health by government buyouts and bailouts.

There is no stock market bottom in sight. The only figure that can be forecast with confidence is that the Dow won’t reach zero!

As the crisis worsens, governments will take draconian measures to prevent total economic collapse and public panic. We have cautioned the likelihood of such measures before. But the rapidity and severity of the economic unraveling now demands immediate attention.

Expect massive bank failures, runs on banks, and bank holidays. Even if deposits are FDIC insured, quick access to money is by no means assured. At minimum, have reserves on hand for emergencies.

Trendpost: When the ship is sinking there are very few options: Life boats, life rafts, life preservers … and for the late to act, possibly a few pieces of floating debris to cling to.

We are trend forecasters, not certified financial advisors legally empowered to provide such advice. Although gold prices declined today some $15 to $925 per ounce, we forecast that gold will be one of the few life saving investments that will continue to increase in value, reaching $2,000 per ounce and beyond.

Buy gold online – quickly, safely and at low prices

Source:

“The ‘Greatest Depression’ Under Way”
Gerald Celente
HoweStreet.com, March 2, 2009

Minnie The Moocher, Meet Rosy Scenario

With Washington getting its hands on and spending obscene amounts of taxpayer money to supposedly fight off the Next Great Depression (the mother-of-all spending bills that just became law makes one question this), you’d think Minnie the Moocher was actively working the District these days. While I’m sure Minnie will be busy hitting up others for money for some time to come, there’s a new gal on the block, some say. From the Associated Press’ Martin Crutsinger yesterday:

The Obama administration’s outlook has private economists wondering: Has Rosy Scenario made a comeback?

President Barack Obama’s first budget is based on economic assumptions that are significantly higher than the forecasts of many private economists which could make it harder to reach his goal of cutting the deficit in half by the end of his first term.

The administration insisted that it wasn’t relying on overly optimistic assumptions to make the spending and deficit figures look better, but private economists said the economic predictions underlying the budget Obama released Thursday were far higher than their own forecasts…

The administration predicted that the overall economy, as measured by the gross domestic product, will shrink by 1.2 percent this year but will grow by a solid 3.2 percent in 2010. That growth would be followed by even stronger increases of 4 percent in 2011, 4.6 percent in 2012 and 4.2 percent in 2013.

By contrast, the consensus of forecasters surveyed by Blue Chip Economic Indicators in February predicted that the GDP will fall by a larger 1.9 percent this year and then increase at weaker rates of 2.1 percent in 2010, 2.9 percent in 2011 and 2012 and 2.8 percent in 2013.

Nariman Behravesh, chief economist at IHS Global Insight, a major private forecasting firm, called the administration’s forecasts “way too optimistic” and said it could represent a return to the overly optimistic forecasts of previous administrations confronted by surging budget deficits.

“They used to joke during the Reagan years that the highest ranking woman in the administration was Rosy Scenario,” he said. “We may be seeing a return of Rosy Scenario.”

Today’s GDP report only increased doubts about the accuracy of economic assumptions made by the government. Bloomberg’s Timothy Homan reported:

The U.S. economic contraction in the fourth quarter was deeper than the government first estimated, with other reports today signaling little prospect of relief until at least the middle of 2009.

Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said today in Washington. Separate figures showed consumer sentiment and business activity dropped this month…

U.S. GDP was previously estimated to have declined by 3.8 percent last quarter. The 2.4 percentage point revision was almost five times as large as the average adjustment, the Commerce Department said. The median forecast of 74 economists surveyed by Bloomberg News was for a 5.4 percent decline.

Cab Calloway, “Minnie The Moocher” (1953)
YouTube Video Link

Sources:

“Economists wonder: Rosy Scenario makes a comeback?”
Martin Crutsinger
Associated Press, February 26, 2009

“U.S. Economy: GDP Shrinks 6.2%, More Than Previously Estimated”
Timothy R. Homan
Bloomberg, February 27, 2009

For Some Businesses, It’s Not All Gloom And Doom

Back in the late nineties, an old mechanic buddy of mine and I were hanging out at my place when my sister pulled up in her “new” used car. She had mentioned to me a few weeks earlier that she was looking to buy a car. As she was only in her twenties, I figured, why not buy something that’s reliable and gets good gas mileage, right? Knowing that she’d take my advice seriously, I wasn’t too surprised when she came by in a luxury German sports sedan. My friend and I took a look at the car, and while it was a really nice ride which appeared to be in pretty good shape, Ray warned that the maintenance costs would be significant. “It’s a performance car,” I remember him saying, “So don’t be too surprised when the bills start adding up to correctly maintain it.” Several thousand dollars and just a few years later, that car was history. It’s been some time since I’ve last seen Ray, but I have to wonder if he’s not up to his neck in auto repairs these days, as I’ve heard his trade is doing well. In fact, I hear a lot of repair businesses are holding their own, and even thriving, during these dark economic times. From Reuters’ Tim Gaynor yesterday:

On a gritty corner in Tucson, Arizona, used tire store owner Andy Alexander says business is fine despite the economic downturn — and partly because of it.

“When people come in here, they know we are not going to give them that new-tire pitch. We’re going to say ‘We can make this tire work for you,’ and send them on the road,” said Alexander, who patches tires for $5 and offers a set of used tires from $60.

As tens of thousands of workers are laid off across the United States each week and many more fear for their jobs, businesses from automakers to television manufacturers are having an increasingly hard time selling new goods.

But repair and refurbishment firms, ranging from small family businesses like Alexander’s to publicly traded companies, are doing well extending the lives of much-needed items that keep people going through hard times.

While Alexander’s firm keeps cars rolling, at Mt. Lookout Shoe Repair in Cincinnati, Ohio, manager Matt Switzer keeps his customers well-shod.

The firm’s business of fixing shoes, luggage and other leather goods has been increasing steadily for over a year, with the small shop now taking in 70 to 100 orders a day.

“A lot of people say they’d rather put $40 into a pair of shoes than $100 for a new pair, and we get that more and more every day,” Switzer said.

The current recession has led to the loss of more than 3.6 million jobs nationwide since it began in late 2007. Nervous consumers have become wary of buying new items.

But at Switzer’s in Ohio, completed repairs, stored in brown paper bags with ticket attached, are stacked to the ceiling behind the counter, awaiting pickup.

“You hear shoe repair always does good in a depression, and that’s what we’re hoping for,” he said…

Source:

“As U.S. downturn deepens, repair business thrives”
Tim Gaynor
Reuters, February 19, 2009

Paul Volcker: Global Economy Deteriorating Rapidly

When Paul Volcker speaks about the economy, people tend to listen. And earlier today, Volcker, who was Federal Reserve Chairman from 1979 to 1987, talked about the rapidly-failing health of the global economy. Reuters’ Kristina Cooke and Pedro da Costa wrote:

The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

“I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,” Volcker told a luncheon of economists and investors at Columbia University.

Source:

“Crisis may be worse than Depression: Volcker”
Kristina Cooke, Pedro da Costa
Reuters, February 20, 2009

From Wall Street To Fall Street

There can be no doubt these are trying times down on Wall Street. The Associated Press’ Tim Paradis wrote this evening:

An important psychological barrier gave way on Wall Street Thursday as the Dow Jones industrials fell to their lowest level in more than six years.

The Dow broke through a bottom reached in November, pulled down by a steep drop in key financial shares. It was the lowest close for the Dow since Oct. 9, 2002, when the last bear market bottomed out.

The blue chips’ latest slide dashed hopes that the doldrums of November would mark the ending point of a long slump in the market, which is now nearly halfway below the peak levels reached in October 2007.

Unfortunately, this latest milestone down on The Street comes after another one that BusinessWeek’s Michael Mandel picked up on Tuesday. Mandel wrote:

During the darkest 10 years of the Great Depression, from September 1929 to September 1939, the stock market dropped roughly 50%, adjusted for inflation. With today’s drop in the stock market, the U.S. has now matched that unfortunate milestone. The Standard & Poor’s 500-stock index, adjusted for inflation, is now down about 50% over the past 10 years from Feb. 17, 1999 to Feb. 17, 2009…

Mandel noted something rather unfortunate about the occasion. From the piece:

The Depression-level decline in the market has come during a stretch when many small investors, on the advice of financial advisers and the financial media, put much of their savings into equities.

Sources:

“Dow ends at lowest close in more than 6 years”
Tim Paradis
Associated Press, February 19, 2009

“Stock Decline Hits Depression Levels”
Michael Mandel
BusinessWeek, February 19, 2009