Recession Started In December 2007
By Justin Gardner | Related entries in Barack, Economy, Money
I reported on this in January and now we have official confirmation.
Good times…
The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.
The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.
So what’s the biggest threat right now for America’s economy?
Personally, with the news of a possible $2 trillion pull back on credit by the banks, I think we’re look at the potential for a serious deflation. And if that happens, watch out, because it’ll really kill business investment.
This is why one of the first things you’ll see Obama and his economic team do is propose a MASSIVE stimulus package to start rebuilding our infrastructure AND urging the Fed to print more money so prices don’t drop too drastically. The former is a long term strategy and the latter is for the short term, but both could help create more market stability.
What do you think will happen?
This entry was posted on Monday, December 1st, 2008 and is filed under Barack, Economy, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 1st, 2008 at 7:58 pm
Difficult economic times will be a way of life for quite a while until we take action for our own financial lives. Escape the craziness. Life is supposed to feel good. Life is supposed to be fun. Release things that don’t feel good. http://www.LikeSoup.com
December 1st, 2008 at 8:49 pm
A agree that a massive stimulus package is needed and Obama has made it clear that he wants to launch one as soon as he takes office
The problem — and there’s always a problem — is that once you begin talking about money in the hundreds of billions, everyone wants a piece and even more importantly, every cluster of members of Congress and every powerful individual member will insist on some particular, favored expenditure.
And whether the result will be the RIGHT stimulus plan, one that maximizes the short- to medium-term impact on generating economic activity, may not be all that important to the people on The Hill with the votes.
Obama will need to exercise some pretty fancy leadership to herd all those cats and make sure we don’t waste 100 or 200 billion dollars. There will be a powerful tendency to yield a lot of special favor money to get a package approved swiftly.
And as the late Senator Everett Dirksen, the Republican Senate leader who (I think) once held the same Illinois seat as Obama, used to say, a billion dollars here, a billion there, and before long, we’re talking about real money!
December 1st, 2008 at 8:53 pm
I agree but the problem — and there’s always a problem — will be making sure a huge stimulus package actually goes to the types of spending with the greatest stimulating impact.
With hundreds of billions on the table, everyone in Congress will want money for their own favored programs and projects, regardless of the economic value.
Keeping this to a minimum will be like herding cats.
December 2nd, 2008 at 7:01 am
[...] why I said yesterday that what you’ll probably see from Obama next year is a massive stimulus package (long term [...]
December 2nd, 2008 at 7:02 am
The credit pullback will, in the long run (loooong run) be good for America. We’ve behaved like spoiled children, buying toy after toy that we can’t afford on easy credit. Here’s a crazy concept–save money and pay for things when we buy them. Live beneath our means, not at or above.
The overuse of credit is one of the main flashpoints that has caused this mess in the first place. We wanted faster economic growth and rather than driving innovation and output, we made credit easier to obtain. This created an artificial bubble in everything from housing to automobile purchases to furniture and electronics. Now that bubble has popped, and instead of figuring out ways to cure the disease (painful ways, all of them), we’re just pumping more fiscal morphine into the system.
Ok, /rant_off. Less credit is good.