While brazilian bombshell Gisele Bündchen may not be an economist, her statement about the economic turmoil in the United States may strike a chord that no market report could.
Bündchen, famous for her Victoria's Secret posing, let it be known in November that she would prefer to be paid in euros instead of dollars, her sister and manager told Bloomberg News. Bündchen, no dummy, makes roughly $33 million a year. Though her publicist denies Bündchen has nixed dollars as a form of payment, she joins billionaire investor Warren Buffett and others who are publicly questioning the strength of the almighty dollar.
Despite economists trumpeting steady unemployment, high values for the Dow Jones industrial average, and surprisingly robust 3.9 percent gross domestic product (GDP) growth for the third quarter of 2007, there are signs of trouble brewing for the U.S. economy.
One red flag was slow GDP growth through most of 2007, and projections of more to come. Another warning sign is evidenced by major corporations, such as AOL, Intel, and Motorola, joining the American auto, housing, and financial industries in undergoing massive layoffs.
In a November report, Challenger, Gray & Christmas, an international outplacement consulting group that tracks job cut announcements, said the 140,442 job reductions announced by financial firms through October already surpassed the record for most financial industry cuts, set in 2001. Housing layoffs, including construction, real estate, and related financial jobs, totaled 109,435 for the first 10 months of 2007, according to the report.
Three things are pushing the economy along, says Karl Case, the Katherine Coman and A. Barton Hepburn professor of economics at Wellesley College: unfailing consumer spending, strong nonresidential fixed investment, and increasing exports.
If one of these economic engines fades, the economy is headed for recession. Case says if he were to wager, he'd bet on a recession. Zelman & Associates CEO Ivy Zelman sees similar chances: up to 50 or 60 percent.