Theoretically, this would be good for exports if the US were not buying goods from China, Japan, Germany, and UK as well as service from India and Ireland. Jobs will move abroad, leading to increased unemployment. Things are already headed that way.
"It's conceivable that we entered a recession in the fourth quarter of this year,'' said Paul Kasriel, director of Economic Research at the Northern Trust Co. in Chicago and a former Fed economist. He goes on to predict that people would be spending less money in the holiday season this year as unemployment rates climbed to from the November figure of 4.7 percent to 5.6 percent next year.
What is the bottom line?
According to Part Two of the Motley Fool analysis, the recession facing the US economy is spelled out in the frozen credit market and the real estate crisis that refuses to go away and may in fact lead to a crisis of foreclosures, as well as the need for higher interest rates for foreign investors which will ultimately cripple the economy.
Their advice to the consumer is to avoid businesses that require debt to function (it’s not just a local issue either, e.g. Centro, in Australia, which owns over 700 US malls, has slumped in the marke,t and has concerns of solvency after February), stay out of debt (no Holiday skip-a-pay!) and save your money.
Easier said than done, especially right in the middle of the holiday season.
Article comments
1 - Juan dela Cruz
The impending US economic collapse looks artificial. With all those scientific and technology achievement America has attained, America still has all the capability to bounce back. Unless, your leader wants to pull out the plug. As a peron who lived in impoverished country all of his life your case is not really a big deal. As long as America has a military superiority those who are pulling America down the drain have to think twice.
2 - Dave Nalle
You should have posted this article to the Politics section. It would have generated some interesting discussion there.
One issue:
redit card debt alone was at $753 billion in 2005. Today, the total consumer debt is around $10 trillion. $10 trillion divided by the number of households or 300 million people is equal to $33,333 per capita " and increasing " thanks to subprime mortgages, continuing credit accumulation, and dubious schemes.
First off, you're comparing apples and oranges and second, you don't provide complete context for your figures.
Credit card debt was only $904 billion in 2007. That's an increase of about 20% from 2005, of course it's not as large an increase as you might think because of inflation and the number of new people who entered the workforce, but at least is IS an increase. The real problem is that your $10 trillion of total personal debt (assuming that figure is accurate) is substantially LESS than the $11.4 trillion in total personal debt owed in the US in 2005.
What that tells us is that the debt reducing impact of refinancing mortgages at lower rates in 2004-2006 massively outweighs the increased debt of people buying new houses, regardless of what terms they bought them under. Overall, the housing situation remains more positive than negative, even with the current problems.
Dave