Current Release: September 11th, 2007 | Vol. XXIV Iss. 10

illustration By schaeffer gayle

Prices are on the rise, but are we in a recession?

Amanda kinney

aekinney@vwc.edu

Eyes are gazing wider as you glance at the signs that read almost four dollars for the price of gas. However, it isn’t just the price of gas that is rising. The prices for energy, gas, and food including corn and wheat are sky rocketing. It’s been said that we are in the worst food inflation in close to 20 years.

Our economy is slumping drastically. Real estate is at an all time low, leaving those who build and sell homes without work. It is bad enough that the housing market isn’t enough of a dent on the economy, but now businesses are now curtailing their spending as well. Budgets are being cut drastically leaving businesses and jobs in a bad way.

Tough economic conditions are sure to continue. Residential investments continue to decline, consumer behaviors have been weaker than ever, the new home market remains weak. There are a few signs of improvement but just enough to stay afloat. As well, the supply of housing continues to decline and as the decline continues, builders are no longer building homes.

The word recession is a scary one. It’s when the economy shrinks for six months in a row. The last time this happened was in 2001, but now all signs are pointing towards that dreadful word. Recession.

“Outright recession call.” This is what it has been switched to due to the recent economic reports. Jobs are being cut, decline in home sales, and manufacturing. Consumer spending has been reported to be quite sluggish as well.

When there are problems in the economy, it tends to affect one thing after the other. There will be more pressure weighted on stocks and bonds due to the recession. Experts are saying they see hard times ahead in inventories of homes are not selling, and a large number of adjustable rate mortgages are being reset, leaving more homeowners worried about making higher payments. This leaves more pressure on our not-so-good credit markets. At this time the real estate recession is upon us. Property values are more likely to get worse before they get better. The biggest worry of all is the possibility that the current housing problems will send our economy into a recession.

No one can be sure when a recession begins or ends. Whether or not there is a “recession” will depend on the economic activity and on the judgments of the National Bureau of Economic Research.

Many critics claim that the sharp rise in the trade deficit showed the continued failure of President Bush’s policies that were meant to emphasize the negotiation of free trade agreements as a way to promote U.S. jobs by boosting exports. However it isn’t working. The proof is the current state of our economy. Businesses’ have recently cut more than 80,000 jobs, the most in about 5 years. The

Democrats are arguing that the current president has contributed to the loss of more than 3 million manufacturing jobs since taking office.

The wages are falling, causing the middle class to shrink, due to trade deficits. There is no real answer, but it has been aimed at the failing of Bush’s trade policies.

It isn’t clear whether a recession has been declared, but we seem to be on the way.