Most economists around the world believe that US will eventually be on a recession. Almost every indicator in the country points to it. The chances that the US might slip into another recession are 25-30 per cent, Alan Greespan, reputable economist and former chairman of US Federal Reserve said as early as mid-last year, adding that the only possibility to reduce the double-dip recession probability was the recovery in asset base, in other words rising asset prices. This was a couple of months after criticism against Wall Street analysts fearing more the risk of inflation than another recession.
President Barack Obama a week ago has warned that the United States may face another recession if the Congress fails to raise the current debt ceiling. In the President’s opinion, this could be a “worse recession” and a “worse financial crisis” than before, unless the debt ceiling is pushed up before it hits its limit of $14.29 trillion, Reuters quoted Obama as saying in a pre-recorded interview broadcast by CBS News. The debt ceiling is set by the Congress and is the statutory limit imposed on the amount of money the US Treasury Department can borrow; if nothing is done by about August 2, the threat is that the government might default on its debt payment. This will most likely drive up interest rates, push down household wealth and cause a double-dip recession. The decision will be a hard one, as negotiations will be slowed down by Congressional Republicans as long as they tie their debt ceiling decision to spending cuts as part of the deficit-reduction measures they favor.
However, a former US Secretary of labor in May this year said this was not at all a good time to reduce public expenditures, emphasizing that inflation was not a bigger threat than slowing consumer spending, that will most probably trigger a new crisis. Consumer spending in the US is caused by lower salaries and a continuous decline in the value of real estate. Moreover, food and energy prices are going up, and this will have an adverse impact on the demand as well, as people who pay more for food and gas will spend less in the rest of the economy. The monetary policies implemented by the Government add to all this by pushing the dollar down, so that goods coming from abroad become more expensive. All these spell recession.
At the same time, one aspect that should not be ignored is that the difficult economic situation in Europe will also be a source of distress for the US economy. Europe has already started to cut its imports from the USA as it implements bailout policies. Moreover, Europe will have eventually to send out its export to the USA to extricate from the crisis. To top it all, China’s economy is a matter of concern these days. If and when the bubble on the Chinese real estate market bursts, the government will most likely take measures to export its goods to the USA. The warning is crystal clear and comes from Russian analysts: if governments do nothing but sit on their hands, the global economy will suffer from a third tremendous depression during the recent 150 years.
Unofficial statistics point to double-dip US recession and hyperinflation. In an interview with The Gold Report last week, ShadowStats editor John Williams spelt it out: hyperinflation and the collapse of the US bond market will follow with a real panic into precious metals that will soar much higher in price. And precious metals say a lot a lot about the health of the U.S. economy. When gold prices are high, the economy is usually either in crisis or inflation. When gold prices are low, the economy and the stock market are healthy. These are things most people should seek to know, as staying informed is the best way to remain safe in times of economic trouble. So, you should find out the latest news regarding economy and precious metals from the Gold Price News.
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Tags: American economy, Debt, economy, finance, Financial Debt, financial state, money, precious metals, recession