US faces worst recession in 26 years Essay Example for Free

US faces worst recession in 26 years Essay The United States is once again experiencing a recession similar to what happened in 1982. The Treasury and Federal Reserve Offices are caught in surprise as they did not expect the economy to take such a fast and dramatic collapse as it has been doing for the past months. As a result, there has been a slowing down of retail sales as consumer confidence collapses. People are not spending as much as before. They are not using their credit cards and making loans as often. Home prices are going down. Foreign demand is also weakening. Alan Blinder, a professor at Princeton and former Fed vice-chairman, is certain that the country will face a recession worse than in 2001 or 1990 but the concern now, according to him, is making sure that this recession is less deep and less long than the 1982 recession. The government has put into action the $100 billion rescue plan to stabilize the banking system and hopes that it will improve things in the next few weeks. Columbia professor and former Fed governor, Frederic Mishkin, believes that in spite the bailout, the damage has been done already so that the future still looks uncertain. In the meantime, the possibility of rising unemployment rates threatens to deepen the housing slump, depress mortgage rates and increase non-payments of consumer loans. Nevertheless, Fed officials continue to look for ways and options to improve the economic outlook of the future. I agree with the writer’s views that the economic recession exists and that it is bound to get worse even as Fed officials are doing as much as they can to at least soften the blow of the crisis. No one can deny it as we feel it everyday through stories of friends or their parents who got laid-off, who have to move because they cannot pay their house mortgages anymore or those who could not pay their credit card interests anymore. However, the economic recession that the country is experiencing today can be looked upon as just another financial problem for the United States. In the history of modern America, the country has undergone one economic crisis after another, but is still able to rise above each one. For years before every economic downturn, the country has grown and improved. One cannot always be moving up. One has to fall sometimes. The crisis today is a good wake-up call to Americans who have become too comfortable with being citizens of a rich country so that they simply buy things on credit, confident that they would always find the means to pay for them because salaries would keep increasing and their standard of living would only keep improving. A recession makes the people conscious of their spending habits and maybe this is why after a while, the economy grows again. When all of America learns to be more conservative about their spending and become more conscious of how they manage their money, the economy would improve. Reference Guha, Krishna. (19 October 2008). â€Å"US faces worst recession in 26 years,† The Financial Times. Last updated on October 19, 2008. Accessed from http://www. ft. com/cms/s/0/232eb4de-9e20-11dd-bdde-0077b07658. html? nclick_check=1