I read an article about massive recession in the U.S. First of all, I seriously hate it if the US hits a bad patch. It has reported weaker results and this has caused some concerns. However, one person seems to be extremely worried. He is the Republican presidential front-runner Donald Trump. At this juncture, he remains to be the favourite to be Republican’s representative to face either Hillary Clinton or Bernie Sanders.He predicted that the US economy will soon face a “very massive recession.” The reasons include high unemployment and an overvalued stock market. He put real unemployment above 20 percent. If it’s really 20 percent, I think the US is really in big trouble.
Trump may be a Presidential hopeful but he may not be a prominent economist. According to Harm Bandholz, chief U.S.economist at UniCredit Research in New York there are no signs that the economy is going into a recession and the unemployment rate is certainly not 20 percent. The official unemployment rate has fallen from a peak of 10 percent (October 2009) to the current 5 percent. Do note that this was one key figure for the Federal Reserve to raised the interest rates just months ago. Great news: Largest economy adjusted interest rates upwards n the economy and financial markets.
Trump also said, “I think we’re sitting on an economic bubble. A financial bubble.” Trump may have some reasons to say that. The corporate profits have been falling and yet stock prices continue to rally which pushed up the market’s valuation. In fact the stock market is already 15 percent pricier than their long term average valuation. S&P 500 waste 2,073 on 1st April 2016. An earlier prediction by a prominent person said: Bubble will burst when S&P 500stock index reaches 2250 So, 2,073 is really not near 2,250 yet. Please choose one side to believe because it may impact what we do with our money.
Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo said that the probability of massive recession is however extremely low, perhaps less than 10 percent. If the recession does happen, it would be because of China and Europe. I think this is a bold prediction. Europe has that probability due to some of its nations being weakened economically but China has much more flexibility in the things it could still do and will do. How about the possibility of it originating from ASEAN then? Please proceed to google for the news and share with me yeah. My personal thoughts based on all the readings? Possibility of a crisis starting with ASEAN is quite unlikely unless some events unrelated to economics happen. Happy reading and following.
written on 4 Apr 2016
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