After a Good 10 Years

After a Good 10 Years

"US officially enters a recession", "Jobless Claims Rise Again", "Stagnant Labor Market", these are just a sample of news headlines Americans have seen for the past two years. These really allow you to be optimistic about America's future. Many factors influence America's outlook on spending, savings, and working today.

According to BBC news the US officially entered a recession in November of 2001, despite the fact that senior economists had been predicting it since March of 2001. The US has endured 10 recessions since WWII. The last was in March of 1991. The ten years following that had been the longest period of expansion in history. We all hope that the recession we are currently in will eventually lead to a long period of expansion. All good things come to an end and that is exactly what has happened here.

You may be asking yourself, what exactly a recession is. Well, there are many definitions but the one that was the easiest to understand was online on Encyclopedia Britannica's website. It is defined as a downward trend in the business cycle characterized by a decline in the production and employment, which in turn causes incomes and spending of households to decline. Even though not all households and businesses experience actual declines in income, expectations about the future become less certain during a recession and cause them to delay.

All of these characteristics meet and may even exceed what is going on in our economy today. Many things can be to blame for our current economic situation. This is depending on who you ask. Some will blame the September 11, terrorist attacks on Washington and New York, but the decline was only undermined by this according to

cnnmoney.com. Other people will blame the corporate scandals and some will even blame the cheaper labor markets.

It is true that all of these factors can be taken into account but placing the blame on one sole issue is farfetched. It could almost be called a snowball effect, because when it rains it pours.

According to CNN Money, payrolls are still 2.7 million jobs thinner since the beginning of the recession. Economists see signs that the economy's GDP growth in the 3rd quarter. The employment rate is a lagging indicator and doesn't improve until long after the economy has improved. We can expect the unemployment rates to be high for a while. Unemployment rates crept above 400,000--a level that indicates jobs are still being cut, during the week on September 4, 2003, according to the Labor Department.

Many problems can be called structural rather than cyclical, meaning that the jobs that people have lost are never coming back. This is due to technology driven gains in productivity having allowed manufactures to make more products with fewer workers. Technology has allowed employers to be more productive but not always have as high quality. Competition from other nations, with cheap labor workers, mainly China, makes it hard on our businesses to have US workers. Why should the businesses pay such high rate when they can pay people oversees to do the same job without having to pay them as much. The US is however, forcing China to revalue its currency.

The interest rate in America today is at an all time low. In many ways it is good for some industries but bad for others. For example, the low rates have sparked the real

estate industry. Many Americans are buying houses or refinancing