Our gross domestic product contracted in the third quarter of 2008 and is contracting in the forth quarter. There is very little doubt surrounding that. The National Bureau of Economic Research put the start date of our current recession at December of 2007. Simply looking at the employment patterns and trends it appears that this recession will be the worst on record since World War II. Another reason why this recession will be so painful is that 40 percent of our national GDP comes from 5 states, many that are in painful contractions.
The United States received 40 percent of its GDP from California, Texas, New York, Florida, and Illinois. California accounts for over 12 percent of national GDP and currently has a state unemployment rate of 8.2%, the third highest in the nation. If we dig deep and look at the California housing market, it is abysmal and shows no signs of bouncing back. This weekend 60 Minutes talked about the Alt-A and option ARM crisis that will hit us in the upcoming years. The 2 states with the largest concentration of these loans are California and Florida.Read more
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