Global recession looms amid worrisome reports

All signs point to recession. On Thursday, stocks slid on reports that manufacturing was down, particularly in Europe and China. And the Federal Reserve warned that the economy is facing, "significant downside risks." 

NEW YORK, NY (Catholic Online) - Virtually every economic indicator from unemployment to manufacturing has been pointing to another recession, but occasional rallies and bits of good news have kept some investors optimistic. However, even the most resilient optimists have reason to be downcast.

European manufacturing and service sector figures either showed slight growth or decline for September. The reports are the worst since July 2009. Even the stronger European economies such as France and Germany showed only slight growth. 

In England, the CBI manufacturing index showed even more manufacturers reporting less demand and fewer orders than normal. The British cited the general economic slowdown and volatility as factors. 

Adding to the sense of danger is the risk of Greek sovereign default as that country tries to rebuild its economy amid crushing debt. 

The HSBC manufacturing index for China also showed a decline in orders for Chinese manufacturing. Economists see China as a bellwether, and if the Chinese markets are slowing then it is a strong indicator of a worldwide slowdown. 

The situation is more serious than many realize. Since World War II, such a slowdown has only occurred once before, in 2009. Experts warn that even if the global decline isn't happening, individual countries can still fare poorly. However, it is much worse for any one country if global markets are in decline. 

As the threat of a global recession looms, the U.S. Federal Reserve announced Operation Twist, a plan to lower already low interest rates in the hope of providing some stimulus to the economy. However, few believe the measure is likely to provide the jump-start that the U.S. and other large economies such as Europe and Japan need. 

Fear of a global recession is growing and policy makers have very few options left to them. If a recession is coming, it could easily be more painful than the last.

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