Economy Report: Recession? Not so Fast…
There have been mixed reports in recent news on the topic of whether we are in a recession or not. With constantly rising oil prices, seemingly dwindling paychecks and the cost of just about everything on the rise, most feel we are in a recession. However, many recent signs point to the opposite.
The stock market took an upward turn for the third consecutive day (a minor victory in and of itself) on Thursday, rallied by several positive factors for the economy. Possibly the most celebrated factor was the $4 plunge in crude oil prices. This was mainly due to some gain in the dollar against foreign currencies, and a positive growth in the U.S. Gross Domestic Product.
The U.S. GDP grew by a mere 0.9% last quarter. While this may seem very minimal compared to the 2.5-3% growth of a healthy economy, it is still a growth nonetheless. This figure will ensure that we do not OFFICIALLY fall into a recession for at least another two quarters. By definition, a recession is two fiscal quarters of consecutive negative GDP growth.
On the bank side of things, the Federal Reserve Board auctioned relief loans to struggling banks on Thursday, however only $16 billion of the offered $25 billion were taken advantage of. This can be seen as a positive sign that not as many banks are needing “bailout” funds from the Fed, and may be an indicator of a positive affect of the Fed’s several rate cuts and bank bailouts earlier this year. The Fed will conduct another three rounds of bidding in June, with each auction having $75 billion in relief funds up for grabs. These funds are available for banks that need it to keep the flow of “easy credit” moving to consumers so that consumer spending does not increase. The fiat monetary system at its best.
We can all agree that while we’re not in a textbook recession, it certainly feels like we are in an actual recession. Gas prices are not expected to come down anytime soon save a few cents at the gallon here and there. Even if Congress can pull together and allow more offshore drilling and oil exploration, we won’t necessarily see the benefits for several years, according to energy policy expert Robert Bryce, author of Gusher of Lies. He suggest offshore drilling in the Gulf of Mexico may provide faster relief, but ultimately drilling in the Northwest, in particular ANWR, will provide the largest relief in the long run. Bryce is also an environmentalist.
In Congress, there is a tiny glimmer of hope on the horizon. Representative Sue Myrick-R, NC, 9th District has introduced legislation called the Deep Ocean Energy Resources Act, or DOER Act, which aims to lift the federal ban on offshore drilling on the states, and put the decision in each individual states’ hands. However, any profits produced will have to be shared with bordering states if the drilling site is within a certain distance of the neighboring state. Another contingency protects the first 50 miles of offshore area from drilling (to appease environmentalists) should the individual states choose to do so. This would ultimately leave the decision to drill for oil, with the allure of producing profits and helping the struggling economy or the side effect of “destroying” the natural environment to the states, as it should be per the Constitution.
While many signs point to an economy barely holding on for dear life, other signs show a light at the end of the tunnel. It is yet to be seen if we will finally see negative GDP growth and slip into an official recession, or if we will continue at a slow pace and ultimately pull ourselves out. There are just too many factors to take into account. On a personal level, all each of us can do at this point is reduce our personal demand for gasoline, continue to make sound financial decisions, save any portion we can of our paycheck, and make our current debt payments on time, if at all possible.