The article states that third quarter growth is expected to slow down to 1.6%. One of the biggest hits is coming from a slow down in business investment. We have discussed in class how a slight dip in investment can drive the economy into a recession. I have voiced my belief that economists who are insistent that there is a recession coming are a large problem. If the people who we see as experts are insisting that there is a recession coming, then consumers and investors are not going to invest. This will cause a huge decrease in the investment section of GDP, which could also be a large reason as to why our growth rate is expected to decrease.
Even thought the growth rate is decreasing, this does not mean that the US is in a recession currently or there is going to be a recession. The growth rate can slow down and then stay constant as well. I hope the markets are able to "look past the weak report" as the article says.
I agree that if people think there is going to be a recession then they will stop investing, the only thing I'm worried about is that the more people that fear of a recession the more likely it is to happen, and it's very hard to start investing when there is not a lot of hope and people involved. If less people are involved then other people will see it as a sign to also not get involved, thus plunging deeper into a likelihood of a recession.
ReplyDeleteI believe that when economists and investors continually insist that a recession is looming, it creates an economic self-fulfilling prophecy that will eventually lead to a decrease in business investment. This belief resembles what we are seeing in the American economy today, and the continuance of this rhetoric is likely to lead to a recession in the near future.
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