The great scare: A possible recession awaits
Illustration by Brooke Farren
Recent events in the United States have led to fears of an upcoming recession. This is causing much debate due to the impact it would have, not only on the lives of citizens, but also on the 2020 presidential election.
According to USA Today, the U.S. Treasury’s two-year and 10-year bonds have inverted. This shows that investors are looking for more short term returns rather than long term due to a possible loss of trust in the U.S. economy.
“The Fed has also cut interest rates by one-fourth of a point,” AP Economics teacher Adam Hire said. “This is typically a move they would make when the economy is struggling and needs a boost.”
A recession is a period of economic decline that usually includes higher unemployment rates and declines in trade. The last recession in the United States was in 2007 when the housing market crashed, according to Business Insider.
Social Studies teacher Scott Tressler said “A recession is always possible. It is part of the ebbs and flows of a capitalistic economy.”
A recession is always something to fear, but these signs have led to a lot of controversy due to the upcoming election. If a recession were to occur, it would significantly decrease President Trump’s chances of reelection.
“Historically incumbent presidents during recessions don't do well,” Hire said. “Whether it should or shouldn't be this way is up for debate but, generally the people in charge take credit when things are good, and the blame when things go wrong.”
The significance a recession would have on the election has led to substantial polarity on the issue. Some would argue that the talk of a possible recession is solely to cause mistrust in the incumbent president and the economy is flourishing, while others believe that a recession is inevitable and the president is at fault.
Tressler has a different take on the matter. “A recession would not change my view on the election because the president has no real long-term effect on the economy.”
Young people may not feel that they need to worry about a recession because they do not pay taxes or have jobs, but a recession would have many far-reaching effects.
“It won't affect all people the same, but some will lose jobs, some incomes will decrease, investments will take a hit. It will be tough for college grads to find work,” Hire said.
It is also important to remember that starting college during a recession is not a good thing. Loans will be harder to obtain and less income means less assistance from guardians or supporters.
“Proper savings for short term and long term are important aspects of adult preparation for these things,” Tressler said. It is always important to have money to fall back on.
Recessions happen in all economies. It’s part of the cyclical flow and the nation’s economy has been experiencing expansion for some time now. Although this expansion is healthy for an economy, it’s always a sign of a decline in the future.
Hire said historically we have “predictable patterns of ups and downs.” He said, “when is a better question than if.”
No one wants a recession, but it’s important to be prepared and informed on what is going on in the economy. Whether it happens now or later, we’ll most likely see a recession at some point in this lifetime. The quicker we come to that conclusion, the quicker we can focus on other problems in this country.