Now we have word from the president himself that we’re not headed into a recession…..
President Bush said Thursday that the country is not headed into a recession and, despite expressing concern about slowing economic growth, rejected for now any additional stimulus efforts.
… the problem with this is that it’s *almost* a day late and a dollar short.
Granted, people (and more importantly, business in general and large corporations in particular) could decide to take him at his word and go along with the idea that we are not in fact headed into a recession. Enough people, businesses etc doing this would actually lead to putting a stop to this so-called recession before it gets a chance to grow into a real one.
The thing is, when the economic brain trust types start saying that the economy is slowing down and we’re headed into a recession, lots of people and businesses see those statements, figure that the brain trust types know what they’re talking about. (or just believe it because they’ve seen it on television) and start reacting to the recession that they’ve been told is coming… they start spending less money. Employers see people spending less money, hear the talk about recession and cut back on production. This also means that their employees get less hours.. some even get laid off which means that they have less money to spend. Combine this with Big Oil coming up with yet another BS reason to raise fuel prices and things get even worse because everybody has to raise prices to compensate for the higher price of fuel.
Then this vicious circle continues, getting worse every time it goes around until POOF! we’re in a full blown recession that’s barreling along trying to turn into a depression.
I am not a hamster, the only way to change the situation is to break the circle. Employers need to stop cutting back production and employee levels while not raising prices any more than absolutely necessary.. in fact cutting prices anywhere they can is even more help. Then people will decide that they’ve got a tad more buying power and if things remain stable, will begin to do more buying.
This added buying does more to shore up business which means that more people will have more work and therefore will have more money to spend. Having more money they’ll even be inclined to spend it on non-essentials which will help things even more.
The first, most important part of this is to stop believing the so-called brain trusts that are telling us how bad the economy is getting. Believing them makes their predictions of doom a self fulfilling prophecy.