Are we headed into a recession? If so, how bad will it be? And when will the economy start to recover?

Question

I think we are headed for tough times. Although maybe not as terrible as some people predict. We'll enter into a moderately deep recession in 2009. Things will start to get better after about 18 months.

What do you think?

Answer 1

Well, we're already in recession, actually, and it will probably get a smidgen worse before it gets any better, but its not likely to be a depression.

It's not about Iraq, either. The 5 billion we spent there is just a tiny fraction of our government budget, and an even tinier fraction of the entire 13 trillion a year US economy.

The recession was caused more by just natural business cycles, and was worsened by speculation.

First, there was the housing bubble, where speculators took to the housing market and crashed it. Americans are so much in debt right now, that mortgages they couldn't pay caused many to foreclose. Overall, many people suffered because of their poor financial planning, and banks shouldn't have given NINA people (no income no assets) people loans.

Now the speculators are hitting commodities, so the increasing prices of oil and food are worsening the recession, and the Fed is stretched thin because they can't lower interest rates anymore.

So its gonna be a pretty long recession, but this happens after every highpoint of the US economy so don't be too worried.

hope that helped

Answer 2

We're exporting 1/2 a trillion dollars a year to Iraq (this is NOT a made up number.  It's about 50 billion a month to continue this pointless war).  Of course we are going into a recession....we aren't getting any return on that money.

Answer 3

http://articles.moneycentral.msn.com/Sav...

this doesnt make it sound too bad :) but i know it could be horrible

Answer 4

America and  other countries have a lot of economical problems. High prices, fewer jobs, a LOT of unemployment even more than reported, people living on credit with no funds to back it up, banks going under and the list of problems go on and on and on and it will take a very long time to fix things and like it was already stated we will have to do a big lifestyle change and i think it may be more beneficial to us all and bring family's closer etc. We have a long row to hoe ahead of us.

Answer 5

I'm almost hesitating to respond to your query, as you seem to be pretty sure of your prediction.  Would you mind if I were to ask how you seem to know what you know?  On what factors are you basing your predictions?

I have a business degree, and, frankly, I don't feel that I could answer your question with any level of confidence.  Some of the very best minds in the economics field--in academia and in business--make exact opposite predictions.  And they're all a lot smarter than you or I, I'll betcha!

In our worst-ever-so-far recession (namely, "The Depression,") even FDR's reforms didn't do all that much good.  The only thing that got the economy back up and cranking was that horrid 2-front war.  And, while that war got people working again, there wasn't anything much on which to spend the workers' salaries, because all of our resources were going to the war effort, and everything for the citizenry was being rationed.

So, after the war, in the 1950s, we got into the habit of having a consumer-based economy, which is inherently wasteful...and everything in that system seems to collapse in onto itself if we stop consuming ever-greater resources.  And yet we MUST stop the ever-increasing consumption, because our world can't support that sort of thing forever.  And the same thing goes for spending more than we make (both ourselves and our government).  And the same thing goes for corporations shrugging off the costs of "externalities."  (Few seem to realize that our wars are one huge "externality" that's being paid for by everyone BUT the petroleum industry.)

So all that I can say is that we'll probably wind up changing our entire model of what-all constitutes economic well-being...and such a huge cultural shift is likely to take a very long time, not just a year and a half.  In the meantime, many will suffer and will feel that they're not "making it," economically, because they won't be able to afford all of the things that they'd expected that they'd have.  Instead, we'll all have to live scaled-back, and yet more-efficiently (which is not so bad...think of how, for example, electronics become ever-more-efficient, and smaller, while simultaneously becoming ever-less-expensive).  We may not have a lot of bucks, but if we do things right, we'll be able to get a lot more bang for our bucks.

Answer 6

modern economies will always go through a state of flux, they go up then down, but they always equal out. the only thing that is bad about this is when people get used to paying a high price for a commodity (gas, oil, etc.) the price never goes back to the "yesterday" price where it should be set. that is why the gasoline companies are making windfall profits. if people are willing to accept that gas is $4.00 a gallon, that is where they are gonna to keep them. these people don't care, they make their $$$$$$$$$$$$ and leave  us po-folks to pay for it .