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The Recession is Over?
What economic indicators are analyzed to derive this conclusion? With unemployment still high, home foreclosures continuing, maybe someone forgot to tell the economists who declared the recession over. Or is it that us common folks don’t understand what constitutes a recession?
Is this announcement good news or bad news? How are we, the common person supposed to react to this news? What are we supposed to do with this “news”? Are we supposed to go out and start buying big screen TV’s using our credit cards? Or feel more confident to go out and take out a long term long like a mortgage?
In ours and many households that we know (our friends, neighbors and relatives) are still experiencing recession like conditions. Many household incomes have taken a significant drop and have cut household expenses. The recession does not feel like it is over. It was good to read the qualifying part of the article that went on to say that the pain of this recession would linger.
The worst thing that could happen for our government is if the recession were to cause deflation. Currently the precariously balanced economy is leaning toward deflation, yet not. Housing prices have gone down and the construction sector has lost a lot of jobs, yet the influence has not been broad enough to cause a full scale deflation of prices across all aspects of the economy. It could just a matter of time before deflation hits the economy, which could have severe impacts for years to come. To quell growing fears and hopefully stir consumer confidence is, in this writer’s opinion, the reason for the recession ending announcement.
There are worse announcements the government could bestow upon us. However, we have to consider our actions based upon this news. Does the average consumer go on a spending spree to stimulate the economy? So, what happens next? (What is a good credit risk these days anyway?) There does not seem to be a good answer to this question. A good recommendation is to pay real close attention to what the political candidates are saying about what they could bring to the table if elected to office. We are all responsible for the economic mess.