Not a recession!?

When is a recession not a recession? When it is in the United States.

Let me first say that I’m not an economist or accountant. Please forgive me if I don’t get technical terms right (I may have the CPI mixed up with GDP) or have all the answers. However, I was surprised when I learned how manipulative our government has become with the true facts. If they don’t like how the numbers come out they simply change the equation until they do.

Most people living in the US would agree that some part of their lives have changed in the last year due to rising prices. People are buying cheaper groceries. Driving less. Evictions and loan defaults are at an all time high. Prices are up and sales are down on just about everything. Yet according to the US government, we aren’t in a recession. Just a market slow down.

Why? Well that’s because of the way the Consumer Price Index which is used to figure inflation is calculated. Last year the feds removed food and fuel from the calculations. They claim these aren’t really consumer goods. Hmmm. Consumers buy them. They figure into our daily lives and budgets. Yet they are no longer officially part of the CPI. As a result, the figures are skewed since they now reflect mostly purchases made with disposable income such as cars, electronics, furniture, clothes, appliances, etc. So, now with food and fuel removed (which have seen record price rises), the fed can say that despite rising prices, we aren’t in a recession. You need a rise for 2 consecutive quarters for that. However, if you factored food and fuel back into the Consumer Price Index we have been in a recession for over a year and are dangerously close to the start of a depression.

Another why here. Why did the government do this? The original numbers indicated we were starting a recession. They didn’t want to admit this. They wanted to paint a rosy picture of the US economy (especially in war time) because of the falling dollar and rising oil price to help foreign investors. Also, to calm fears about a recession at home the truth was whitewashed in phony numbers in the hope it would soon go away.

Unfortunately, this only made matters worse. Banks continued to lend to investors they shouldn’t and people continued to borrow money they couldn’t afford. Finally the truth came out too late. Now they have to back peddle and spend billions of public money to try to straighten the mess out.

It would have been much simpler to admit at the start of the recession that we were truely entering in a recession and put measures in place to deal with it. Instead, now banks are going under. There is no money to lend for those in a position to use it which is stalling the economy even more. Companies are laying off workers rather than hiring. Investors are bailing out of the markets in mass. Now, the rest of the world is following. The foreign investors are heading away as their own markets start to fall.

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