Lack of consumer spending curtailed demand and hence adversely affected manufacturing activity. It is now almost certain that the American economy has sunk head-deep into recession. Supporting this view is the data on the jobless rate, which skyrocketed to 5.4 per cent in October. This means that as many as 4,15,000 people lost their jobs in October, in addition to 2,13,000 in September and 54,000 in August.

The latest data on the American gross domestic product (GDP) also confirms the general impression that the US is deep into a recession. In the period between July 2001 and September 2001, the American GDP declined by 1 per cent. Earlier, there was a misconception that the GDP had declined by 0.40 per cent, leading some to believe that recession was just about a mild one.

What impact can this cause? The American economy, which accounts for 40 per cent of the world GDP, will drag the world economy either into a recession or into a prolonged slowdown. It is clear that India will suffer too, though exports account for only 10 per cent of its total revenues.

The worst fate awaits Indias software industry, once a booming segment, as almost 80 per cent of the Indian exports are made to the US. Nonetheless, it goes to Indian software manufacturers credit that they have been making an attempt to find new avenues for putting their products into use, one of them being the Europe.

Are American manufacturers doing anything special to fight recession? At least the US auto industry seems to be fighting it by offering zero interest rates and zero down payments. This led to car sales zooming by 25 per cent in October in comparison to the corresponding period in the previous year. Analysts are not hopeful of such strategies sustaining as losses are mounting on carmaker. For example, Ford is said to be loosing $1,000 per car sold.