Jessica Mondillo’s Blog

Recession? Yes, But Technically No

03 March 2008

According to an article on AOL News, Warren Buffet claims the US is in recession, even though the conditions of a recession are not met. Buffet commented that, “by any commonsense definition, we are in a recession.”

Although the US had not had two consecutive quarters with negative growth, most companies’ sales have been slowly declining. Companies like Ford, Toyota and GM have all had a decrease in car sales recently.

I agree with Buffet that by a commonsense definition, the economy is in a recession.

Last semester I had to read the Wall Street Journal everyday. After a few weeks, or even days, of that you know the state of the US economy. One article near Christmas time told of a family that would not be buying any Christmas gifts (even though they normally did) in order to keep a roof over their head. More articles focused on the price of oil and how that would effect heating a home and the price to travel. The majority of articles talked about the sub prime mortgage crisis and the number of houses being foreclosed.

AOL also has recently had some economic related articles. One discussed how more people were cutting back on luxury spending and opting to cut costs out of their everyday routine.

With all of that information, I’d say the US is in a recession, or at least the start of one. People will stop buying luxuries, because they cannot afford them. People will stick onto old cars longer, because new ones are expensive and their old ones still work.

I go to gun shows with my dad, and when I was younger the amount of sales was much higher than it is now. Fewer people come to the show and even fewer have money to spend. My dad also sells on eBay. When he started two or three years ago the number of orders he received was higher than the number of orders he currently receives.

Using a strict economic definition, the US is not in a recession. But my commonsense says that the US is in the beginning of a recession regardless of what the numbers says.

Please visit this post at my other blog.  Thanks!


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