U.S. Recession–Are We or Aren’t We There Yet? - Page 2 of 2

U.S. Recession–Are We or Aren’t We There Yet?

of the BE Board of Economists. “However, banks have become so conservative, because of the credit crisis, so the new money made available to them through the Federal Reserve actions is not being loaned out at rates the Fed would like to see. The banks are afraid that they will not have enough cash to meet their internal demands and therefore are reluctant to lend.” The result: “In general, reductions in the mortgage rate have not had a significant effect on investment or on consumer spending,” Boston adds.

The Economic Stimulus Act of 2008 may provide some relief to Americans who receive a tax rebate of up to $600 for singles and $1200 for couples. However, rather than opting to spend it, many Americans may save it or use it to pay down debt—a move that won’t be much help to the economy, Jaynes points out.

A possible bright side could be the economic growth being experienced outside of the U.S., Boston says. “Economies outside of the U.S. are continuing to grow, and they will drag our economy along in the process. In times past, foreign economists relied on the U.S. for growth momentum. The process is reversed today.”