Wednesday, April 2, 2008
Tom Fudge : What's the number one issue in the U.S. today? To quote Bill Clinton's old campaign manager, it's the economy, stupid. If you follow the news, you've heard plenty of evidence. The dollar is weak, home prices are in a free-fall, consumer confidence is nearly at an all-time low. This morning we got the cheerful news that factory orders are down in the U.S.
The only thing people aren't quite willing to concede is that we're in a recession. Chairman Ben Bernanke of the Federal Reserves testified before Congress this morning. Even though he said the economy is contracting, he didn't use the "R" word. That's because you need to have two quarters of economic shrinkage before recession is official. So far, officially, we've had anemic growth. I hope that makes you feel a little bit better.
There are many reasons why the economy is doing poorly. The war in Iraq is draining money from the treasury and causing the dollar to devalue. The boom and then bust of the housing market is having an effect that's similar to that of the dot-com bust we saw early in the decade. When will it end, and what can we do about this?