· Unemployment will hit 9%–if not double-digits be the end of 2009 and nervous Americans will start saving–possibly as much as 10 per cent of their incomes. (Increased saving is often a reaction to tough economic times).
Proof of that final bullet came this week in the form of bleak sales figures from auto manufacturers in the US. According to General Motor's, its December sales fell 31 percent to a 49-year low—fueling fears that the company may be on the verge of total collapse. Other automakers are no better off. Chrysler's sales last month fell a shocking 53 percent and Ford Motor Co.'s sales were down 32 percent.
According to a recent report from Forex Capital Markets, Toyota Motor's deliveries fell 37 percent while Honda Motor sales were curbed 35 percent. If figures like these continue, the US government's bailout efforts may fall well short of the basic need to keep these firms solvent. And, should this sector fail, it could easily send the world's largest economy to a far deeper recession than policy officials and Americans are ready to consider.