US Economy Forecasts

Ron Randall asked:


Ok here we go.

This is my personal opinion of why the American economy is falling and just why it may get worse. For decades now we have been losing in the industrial area. Our industrial landscape or infrastructure has been declining for years. We have become a nation of consumers not builders. Not much is made in this country anymore, we are buying everyone else’s products.

We have settled for cheaper products. We have shot ourselves in the foot. We went form the building industry, to a service industry and now we are just a nation of consumers. A nation of consumers can not survive on it’s own. It has no foundation to stand on and that is where we are now.

I would not mind spending a little more for a product knowing jobs are being created and the money staying here in the America. Cheaper is not always better. Another thing is that the Global Economy has not helped the US at all. It has helped a lot of other countries except the US. Other countries are now becoming captains of industry while we fall behind. This has been happening for decades and now it is all coming to a head.

I believe it kicked in high gear with the signing of NAFTA. That really started the ball rolling. Where companies went running over seas for cheap labor and putting American people out of work and industry. This is when the economical and industrial landscape starting declining. And now here we are about to go broke as a country. Well we already are, borrowing money from other countries just to stay afloat.

We are like someone in debt that continues to borrow money and keeps sinking even deeper. We can not keep this up indefinitely. Who do we have to thank for this? You guessed it our incompetent Government. Apparently the US Government has been tearing this country down for years without any plan for building it back up. They have only been catering to big business and big money. Doing favors for those contributing to their party fundraisers. Money first people second if at all.

These people in Washington that have been voted in have not been working for America. I personally blame Congress. Meanwhile they are trying to point the finger somewhere else. They make the final decisions, and their decisions are costing us are economy. That is why we are in the economical mess right now. We need new people in Washington to work for America not themselves.

It does not matter who is President if we do not build this country from the bottom up nothing is going to work. This is why a stimulus package and tax cuts will not work. It is like a business, it is built from the ground up not from the top to bottom. The top down plan does not work. If we do not bring industry back to the US the economy will totally and completely collapse.

Dane asked:


Though the housing bubble deflated about two years ago, its true effects are only now beginning to emerge. In late 2006, when the economy first began to show signs of weakness in the housing market, most economists predicted that a recession was very unlikely, and that any downturn in real estate prices would be localized and mild. In reality, a global downturn is now a real threat, with the final price of the credit crunch projected to exceed $1 trillion dollars.

Not only have falling house prices in the US spread to other markets abroad, they have contributed to massive losses in other areas of lending such as credit cards, and the financial industry, which is now reeling from the US government bailout of Bear Stearns. What does this mean for emerging economies like China and India? In the short term, volatility seems to be the order of the day, with India’s fledgling exchanges rocked by jittery investors. Until financial centers and investors can regain confidence, market conditions will be exaggerated. Early trading also plays a psychological role for investors, as news developments impact Asia before Wall Street opens.

The US and the UK both face difficult home pricing corrections which will continue to hamper growth. Most homeowners expect, if not to make a profit, not to sell their houses at a loss, which is a difficult pill to swallow. And if they can’t sell their homes for what they think they’re worth, then waiting it out contributes to prices falling, thus exacerbating the problem.

While government intervention has been exceptionally forthcoming in efforts to preserve confidence in financial markets, less attention has been given to homeowners who are being foreclosed on over the next year, which is only so low because of robust growth in Asia.

Another prospect which looms over every government is the specter of inflation, which threatens to overtake the slumping economy as the number one priority for the Federal Reserve and other central banks, who have had to take extreme action to prevent further liquidity losses. The Fed has sold off over $100 billion in auctions and lowered interest rates five times in an attempt to lower mortgage interest rates, but confidence will remain shaky until the full extent of investment bank’s sub-prime exposure is realized. Stuck between a rock and a hard place, central banks are taking decisive action in hopes that the economy will level out without pushing inflation to dangerous levels.