WASHINGTON — While Americans have spent the last month transfixed by the spectacle of one financial giant after another crashing to the ground, the rest of the U.S. economy has been sinking in the muck.
By now, the process is so far advanced that, even after passage of the Bush administration's $700-billion financial rescue plan Friday, the nation's economic options span the unappealing gamut from bad to worse.
"The wheels seem to be coming off the economy right now," said Brian P. Sack, vice president of the respected forecasting firm of Macroeconomic Advisers. "It's hard to see how we avoid a recession, and it could prove a tough one to climb out of."
Even if the financial bailout plan begins to work, the nation will be lucky if all it experiences is a bad slowdown. The alternative, economists say, is something much worse -- a contraction that might go on for years.
The latest sign of trouble came Friday when the government reported that American employers sliced September payrolls by 159,000 jobs, the ninth straight month of losses and one that puts the country on track to shed a million jobs this year.
But jobs are only part of the trouble; almost every major player in the economy -- which had been growing until recently, if only slowly -- is now beating a hasty retreat:
* Consumers, who account for more than two-thirds of the nation's total economic activity and who boosted their spending earlier in the year thanks in part to more than $100 billion in government stimulus checks, have reversed course and begun cutting expenditures. Real consumption, after adjustment for inflation, slipped two-tenths of a point in June, a half-point in July and flat-lined in August, the latest month for which numbers are available, according to the government's Bureau of Economic Analysis.
* Manufacturers, many of whom had managed to profit because the weak U.S. dollar helped boost exports, have seen their business begin to dry up in recent months. New factory orders unexpectedly dropped 4% in August, the Commerce Department said Friday, the biggest decline in two years. Capital goods orders, a key indicator of companies' future investment plans, slipped 2.4%, the biggest drop in more than a year and a half.
