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Berserker's avatar

The recession; what is the true state of it as of now, and what does it reserve for the future?

Asked by Berserker (33470points) February 9th, 2010

I’m no good with politics and anything like that, but I have learned that you really can’t always take everything politicians say as actual truth. Sometimes the media doesn’t elaborate enough on what’s going on, and sometimes they blow things out of proportion. It’s really hard to tell, and I’m often faced with several different views, theories and speculations for one single issue, be it social, economic or some global event. Who to trust, how to know the truth?
This, specifically for this question, applies for the recession we’ve experienced. Is it really getting better? Was it even that bad to start with? How do you think this is shaping our future?

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9 Answers

dpworkin's avatar

The recession is over, and has been for a couple of months, however, employment is a lagging indicator, and people will be in a lot of pain for some time to come.

Not only was it a very dangerous recession, almost a worldwide collapse, it fit what used to be the criteria for a Depression, but we don’t use that term any more because it is too frightening.

aeschylus's avatar

I would say that the real recession has only just begun. The causes of it are still with us, namely a consumerist, debt-ridden culture that thinks nothing of the consequences of its actions. The worst is yet to come.

Some people believe the recession is over because of the recent “growth” in GDP this year (of 5.4 percent). The definition of a recession is a contraction in the money supply, leading to unemployment and decreased purchasing power despite lowered prices. This “growth” results from what is called demand-side macroeconomic policy, in which the government spends money on defense or public projects to inject money into the money supply. This most recent “bailout,” or “recovery package” was just such an injection. The money was created out of nothing, being borrowed from the federal reserve and Chinese investment banks, and rolled into the national debt, which is fast approaching 20% of GDP. This debt might actually be good if any of it had been used to increase our national capital. However, most of it was directly consumed, immediately nullifying any potential productivity it may have represented. We have just delayed the inevitable by giving up more of our rights in exchange for a few more years of false stability.

Just my opinion, of course…

People need to start exchanging real value with one another and learning where their consumables come from, not to mention considering whether they really need them at all. Spend money on things that make money, and only buy something if your life will be qualitatively better if you have it. Most things just clutter our lives and distract us from real problems that need solving, from which, ironically, most money comes in the first place.

Get out of debt and acquire land. It’s the only way to weather the storm that is coming, assuming they don’t steal your property to build a mall under imminent domain laws.

Enjoy!

judochop's avatar

Huh, the recessions over? I just went from 90k a year to $1600 a month because the funding for my program can no longer be supported and I work in the liquor industry. Yeah, psssht. What recession?

judochop's avatar

Might I add the past day for my job is Feb. 12th.

Cruiser's avatar

The recession is far from over…jobless numbers are still hovering around double digits, housing starts are non existent, and nobody is spending any money at all. We are at an economic stalemate both domestically and internationally. No country wants to touch our debt….the treasury can hardly give away their notes…we have do something significant and fast. Inflation is the next phase of the economic enema we will have to endure…ain’t gonna be pretty!

ETpro's avatar

Great question. @dpworkin is right. We came VERY close to a second worldwide depression. Had we just let the market fix itself (exactly what Washington did in 1929) we would undoubtedly be in a worldwide Great Depression II now. Also, by the standards that economists apply, the recession is now over. Recessions are said to begin when we experience 2 successive quarters of contraction in the Gross Domestic Product, and they end when the GDP begins growing again.

But @aeschylus is also right that there are serious, long-term systemic weaknesses in the US economy and they aren’t going away overnight. They aren’t going away at all unless somebody admits that there’s an elephant in the room, and so far, politicians aren’t even facing that fact. If we keep heading the way we are now and have been for the past 3 decades, we will watch the US middle class slowly disappear. We will separate into a few economic elites with virtually all property in their hands, and a mass of working poor and unemployed, homeless poor. Fixing the endemic problems that have us on that path will be painful, and politicians never want to talk to the public about pain.

Qingu's avatar

Before we get into an argument about whether or not the recession is over, it’s worth noting that the word “recession” has a very technical meaning in economics. Technically speaking, the recession is over because the RATE at which jobs are being lost is not falling. But the jobs that have already been lost are obviously not being replaced, at least not very fast. So people are still screwed by the lingering effects.

As for whether or not there really was a recession or if it was made up by politicians to scare up policy, the people crying wolf weren’t just politicians. Every economist was scared about it. And, before Obama came into office, both parties were prepared to deal with it aggressively to avert disaster, which is why Republicans supported TARP until the political winds changed.

And you don’t even have to ask “experts.” Just ask the people you know. How many of them are unemployed? How long have they been unemployed? I have never had so many unemployed friends or family members. If the recession is made up, that’s a pretty vast conspiracy. Seems more likely the conspiracy is made up.

Qingu's avatar

@Cruiser, can you cite any economists that actually think inflation is a danger right now?

I mean, do you have any reason to believe that inflation from our national debt is a danger, or are you just repeating what you heard?

YARNLADY's avatar

Never mind the words – recession – depression – what is coming in the next year and beyond is more unemployment, more housing in default with foreclosures. Prices will continue to fall for most goods, except the ones we use the most, food and fuel. People will have to get used to doing without more than ever.

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