This article points out some of the commonalities between the economic recession of the 1970s, and what we are going through right now, including: strikes at GM, president seeking lower interest rates from the Fed, and increasing prices of oil from the Middle East. It goes on, however, to point out several important differences between the two periods, and how these differences affect the risks we face looking forward. One of the main differences between the 70s and today is that in the 70s there was huge inflation, which caused the problems, and today there is too-low inflation, which is causing today’s version of the problems. In terms of oil, the rising prices today from the Middle East do not affect the US as much as they did in the 70s, mostly due to the requirements of oil having decreased since the 70s, combined with the US producing much of it own oil today. All of these factors seem to suggest that the US economy is less susceptible to shocks than it had been in previous times of impending recession. Does this suggest that we might, in fact, not be heading towards a recession? Or does it just indicate the the recession will be coming from different factors than those listed above?
It does seem to, and agrees with many other sources, imply that we are headed into a recession. The rise of the cost of oil seems to me to be the biggest factor presented in this article leading to a recession, we shall see how it plays out. I think one main factor not discussed how technological advancements may affect how much of a recession we have, if we do. The upcoming UN climate summit may dictate some solutions for this.
ReplyDeleteThe conditions are fairly similar from previous situations. With the overall favorable economic indicators, experts and officials are saying that the country should not fear an upcoming recession. Can we be safe to trust them?
ReplyDeleteAlthough oil prices have been on the rise, the recent bombing in Saudi Arabia only increased oil prices further- so although oil prices have seen a spike they may not be all due to factors of a natural business cycle. Currently we have an inverted yield curve which is the first sign that we're heading in to a recession. I think the question should not be whether a recession is coming or not, rather, how well prepared are we as an economy to deal with the recession? With the Fed prematurely cutting interest rates we may not be as prepared for it even knowing it is a likely outcome.
ReplyDeleteI would have to think that since we are continually seeing growth in jobs, and stable low inflation than we are way less at a threat now than in the 1970s.
ReplyDeleteI think that the events that the article mentions are the key to pay attention to in order to protect from a recession. Whether or not the events such as the workers strike and the bombings in Saudi Arabia which are causing the fluctuations in the economy are resolved soon will tell the tale of what happens with the entire world economy.
ReplyDeleteI think a recession within the next year in inevitable. Germany is pretty much already in a recession and they will drag the rest of Europe down with them. Too avoid a recession Japan is raising taxes on consumers which will slow down consumption. It seems like the rest of the world is teetering on the edge and its only a matter of time before the United States starts experiencing a similar economic climate.
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