Those who defend the government’s proclamation that the Great Recession ended in June of 2008, now must stop and ask themselves if we are headed towards another recession right on its heels. In a recent Reuter’s column former Treasury Secretary, Lawrence Summers, said beautifully of the American economy, “the odds of the economy going back into recession are at least one in three if nothing new is done to raise demand and spur growth.”
It seems all the hoopla over the debt ceiling debate did little more for political posturing than it did for our own economy. The S&P 500 saw a steep decline of more than 2.5% on Tuesday Aug. 2, wiping out its entire 2011 gains. Raising the debt ceiling was portrayed to be not only a miracle drug for what ails the American economy, but imperative to holding the European economy from slipping over its edge. It seems to have accomplished neither, rendering the miracle drug nothing more than some snake oil in a can.
China’s economy is slowing and Japan is still stalled in recession, due to the aftermath of last March’s earthquake. Spain and Italy are moving incrementally closer to recession in Europe and the success of Greece’s bailout has been nebulous, at best. It may be true that misery loves its company, but it seems as if the whole world is going into recession.
Consumer confidence is down and along with it, consumer spending. Chrysler’s head of U.S. sales probably said it best when he stated that the U.S. market is “tougher than a cheap steak.” While the Department of Labor did release some good news today stating that the unemployment rate dropped to 9.1%, down from 9.2%, most Americans are not impressed. Like the markets’ nervous peaks and valleys, so read the unemployment reports; what seems like one step up today will most likely take two steps back tomorrow.
While consumers tend to naturally panic at all these bleak economic forecasts, the corporations are not far behind in this destructive cycle. Banks have announced plans for a crushing 50,000 job cuts to be phased in over the coming years; in fact, according to foxbusiness.com, the number of planned layoffs in the private sector are at a 16 month high. News like this keeps even those consumers with little to worry about in terms of joblessness holding their purses a tighter, you know, just in case. It almost
seems as if consumers and corporations are perpetually yelling “boo!” at each other and running away to hide somewhere. There are those, though, who realize that opportunity exists even in the poorest of situations and take whatever little of said opportunity is available.
Prospective homeowners for instance, may never see again a time when not only are the prices on new homes so inexpensive, but that the mortgage rates are so incredibly low also. If someone feels secure in the continuation of their income, now is a great time to start looking for a home. Ditto for credit applicants: with banks fighting over your money, many are offering low interest rate loans as well as
low interest rate credit cards. Think of it as a sale on credit. Of course, this is only for those who don’t fear total economic collapse and unemployment. There may not be too many people left with that confidence.
Jason Collazo is a Columbia University student whose interests include economics, personal finance, and marketing. This combination of studies helps the writer shine a unique perspective on the U.S. economy, consumer trends, and business competitiveness. He currently writes about business finance and technology for Forbes and regularly contributes to Business Insider. Aside from being a writer, Jason is also a member of Columbia’s NCAA Varsity Diving Team.