It doesn’t look good, dear reader.

The Dow lost 171 points yesterday. Oil slipped closer to $90. And what’s this…gold, up $22.

The debt deal is done. And the Great Correction intensifies…as expected.

“Another bear market has begun,” says our old friend Marc Faber.

“After debt deal: economy in deeper peril,” says MSNBC.

Why would the economy be in deeper peril? Actually, it’s in the same peril. But most people didn’t know what peril it was in. They had swallowed the “recession…recovery” story. They believed it was just a matter of time before the economy got back on its feet.

But it’s not a recession. And there will be no recovery. Never.

It’s a correction. And it has to do its work. It has to reduce debt levels. And that takes time…and pain. Here’s Bloomberg, on the case:

Consumer Spending in U.S. Unexpectedly Falls as Hiring Slumps

Aug. 2 (Bloomberg) — U.S. consumer spending unexpectedly dropped in June for the first time in almost two years and savings climbed, adding to evidence that the slump in hiring is hurting household confidence.

Purchases declined 0.2 percent after a 0.1 percent gain the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase. Incomes grew at the slowest pace since November.

The lack of jobs combined with wage gains that have failed to keep pace with inflation raise the risk of further cuts in consumer spending, which accounts for 70 percent of the world’s largest economy. Companies like Newell Rubbermaid Inc. are among those cutting forecasts for the year.

“Wages are very stagnant and that’s affecting consumer spending and consumer confidence,” Fed Chairman Ben S. Bernanke said in semi-annual testimony to Congress on July 13. “There is also ongoing uncertainty about the durability of the recovery.”

Friday’s news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

Yes, dear reader, so far, so good. Things are not looking up. They’re looking down. Which is fine with us. This correction needs to speed up…so we can get it over with.

Where are we so far? Houses in Florida, California, Nevada and Arizona are down about 50%. Banks have about 2 million foreclosed houses in stock…and about 11 million more are underwater. Prices will probably fall another 25% or so before bottoming out.

Unemployment, depending on how you measure it, is near depression levels. About 14 million people are jobless…with nearly half of them out of work for more than 6 months.

A quarter of the people asked by Gallup pollsters said they thought the economy really is in a depression.

Are we back in a recession? No! The correction never ended…and it has a lot further to go.

Before it is over, stock prices will be cut in half. Food stamp rolls will hit 50 million. Houses will have lost 60% of their value. And more than 20 million people will be out of a job.

Then, our problems will be over, right? Then, things can begin looking up, right? Then, the worst will be behind us, correct?

Wrong!

Then, the feds will really get to work. Private citizens can make mistakes. They can get themselves into deep trouble. But if you really want to make a mess of things, you need government support. Stay tuned.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.