Wall Street Crisis Hits Main Street

In an effort to gain public support for the financial rescue package, politicians have been harping for days on the negative affects the credit crisis will have on the average citizen.

The inability to get student, home and car loans has been a favorite topic in speeches by presidential hopefuls Barack Obama, John McCain, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and any number of imploring senators and congressmen.

News programs have been crammed with stories of bank failures and bailouts in the U.S. and Europe, and the exorbitant interest rates banks are charging each other, but has Main Street felt the impact of the credit crunch yet? It looks like it's starting to.

Job losses have spiked nationwide, auto sales are collapsing, small businesses are finding it hard to secure credit, and the country may soon be facing the largest municipal bankruptcy in U.S. history.

In September, layoffs at U.S. companies jumped 33% compared with the same period the year before, and 7.2% more than the previous month, according to a report issued by the employment consulting firm Challenger, Gray & Christmas Inc. ("Factories mired at recession levels, jobs weak," Reuters, Oct. 1, 2008.)

This is expected to get worse, John A. Challenger, CEO of Challenger, Gray & Christmas, was quoted as saying in the report:

"It may take several weeks or months for the fallout from September's Wall Street turmoil to hit the employment numbers."

Meanwhile, a day after getting presidential approval for a $25 billion government loan, U.S. automakers announced that sales plunged in September for cars and trucks. Receipts were down 35% at Ford, 33% at Chrysler and 16% at General Motors, compared to the same period the year before.

And American car makers weren't the only victims of the slowdown: Sales were down 37% at Nissan Motor Co., 32% at Toyota and 24% at Honda as well. ("Toyota, Ford, Honda Sales Tumble on Credit; GM Beats Estimates," Bloomberg, Oct. 1, 2008)