The last time the US was in a recession was in the year 2007 to 2009. Disastrous times for people living in the country. Recessions usually occur due to a drop in confidence by the consumer, business failure, and other factors that come into play with the same end result. According to the Federal Reserve History, GDP fell 4.3 percent, unemployment rates rose to 9.5 percent and even reached 10 percent at a certain time. During the “Great Recession” home prices began to fall to about 30 percent, everything began to drop in value. And this was all happening because specifically, supply was outrunning demand and the housing market was going to flames. Recessions means suffering, and now there has been murmurs and paranoia of a new one on the way.
Credit: Washington Post
According to Yahoo News, experts warn of an economic downturn, with the only way of an intervention seeming to be policy making. A very noticeable characteristic is the stock market as at the moment some company shares are plummeting, with Target going down 26% and quarterly profits, reported earned shares per a three month interval, dropping 52%, reducing business finance. The Washington Post informs that the Federal Reserve has raised interest rate by 0.75% leading to banks raising their brow at anyone wanting to get a loan. With overstocking and poor sales the market is receiving unexpected blows, the ones that hurt the most. Through CNBC, it is informed that chief economist Gus Faucher predicts a recession to not happen this year, but rather it will be a build up, and that it will hit in a year or two.
Questions:
How likely is a recession this year?
What can be done to prevent an eventual recession?
What policies can be put into place?
Sources:
https://finance.yahoo.com/news/u-may-barreling-toward-recession-190815179.html
https://www.federalreservehistory.org/essays/great-recession-of-200709
https://www.cnbc.com/2022/05/20/us-economy-is-nowhere-near-a-recession-this-year-says-economist.html
2 comments:
I do think a recession will probably hit soon, I would guess next year or late into this year. Mostly because of the exiting covid thing which may actually give a small boost to the economy in short term as people begin to buy and sell stuff in person again. Though I agree a recession or some kind economic stumble will occur in the near future. I think the recession can be prevented or at least lessened if there are more subsidies towards smaller and local buisnesses nation wide. I feel like bailing out the bankers and other large corporations is a negative thing and economic wealth needs to redistributed to middle class and smaller buisness owners. In this sense spreading out the wealth of the nation so that if something fails there is still wealth in other sectors in areas. Secondly generally if more people are middle class or are well to do more freedoms can be exercised by a greater number of people as they will have time to use freedoms like voting or speech (like finding time in their life to write a blog or comment on blog). I do hope Joe Biden does go towards a more distributionist economic stance (as roughly described here) as it is the only economic model that can defend America from communist that plague us and the captalists that scourge us.
I think a recession is likely to be hit soon because with the high amount of inflation occurring, along with gas prices and the economy still recovering from the pandemic. I agree with Pascal that bailing our large corporations is not the best idea since most businesses that would be hurt would be smaller family owned ones. Additionally, spending more of the U.S. budget towards avoiding a recession would worsen the amount of debt the U.S. is experiencing. Some policies that I think that the U.S. government can try to implement could be to stimulate economic activity by placing greater emphasis on infrastructure projects and more government programs so the unemployment rate is lower.
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