What is wrong with our money???

The current economic situation for our country is starting to get out of hand. The government has labeled our problems with the economy as an "economic recession" and this term can sound quite frightening to the average American. What exactly is an economic recession? What does it mean when our economy is receding. According to one source, in regards to the economy, the word recession "is generally used to describe a situation in which a country's GDP, or gross domestic product, sustains a negative growth factor for at least two consecutive quarters." However, this is just one definition for the term. In fact, there is an organization that is responsible for the declaration of a recession. This organization is the NBER, the National Bureau of Economic Research. This agency is also responsible for things such as the measurement of national inflation. Anyways, their definition of an economic recession is a "significant decline in economic activity lasting more than a few months." Since it takes a few months, usually about six, to determine a recession, it could explain why the government didn't officially state that we were in a recession until recently. History shows that the last time the country was in this type of situation was back in 2000-2001. In the fourth economic quarter of 2000, the market peaked. But, what goes up must come down. Following this peak, the economy suffered a .6% decline for the first three quarters of 2001. Although this recession was very short and nothing too critical, it was a recession nonetheless. How did this situation happen? In March of 2000, NASDAQ crashed when the "Dot-com" bubble eventually popped. The dot-com bubble refers to the period in history when the value of stock of Internet based companies rapidly increased. This bubble eventually burst in 2000, greatly effecting the NASDAQ market. Some believe that the bubble burst when there was a weak income from Internet retailers after the 1999 holidays or when was a multi-billion dollar deal between Cisco, IBM and Dell. All in all, when dot-com collapsed, the market was crippled. Luckily for the American people, the recession was very minor and the economy went back to its normal self. However, this time around, we might not be so lucky. The 2001 recession only lasted for three quarters because of the collapse of the "Dot-com" bubble. Our current recession is attributed to far more problems. At this moment, we are dealing with the mortgage crisis, an expensive war, limited energy resources and much more. The fact of the matter is, the American people do not trust the economy like we used to in the past and this is greatly affecting our situation. Back in the recession of 2001, Bill Clinton had recently left our country in a surplus: "profits remaining after subtracting for operating expenses, taxes, interest and insurance." Even when the recession hit for a few quarters the American people were confident that our government was capable of returning the economy to prosperity. Nowadays, the people see all of the problems in our lap and simply don't believe that we are capable of fixing everything. Even if this isn't the case, at least during the 2001 recession multi-billion dollar stimulus packages weren't needed! I truly don't believe that trusting the current system will get us out of this situation because there are simply too many problems with the economy and drastic measures need to be taken.

Honestly, I think it really matters that we didn't name this situation as a recession until recently. The reason it matters is because naming it an economic recession will have it's positive and negative impacts on the American public. First of all, effects the decision making of the American people. If people had known that this situation was a recession right from the start, we might have been able to limit the damage that had been done. Some individuals may not have taken that loan from the bank or bought that gas-guzzling SUV if they had known that our economy was only getting worse. By waiting longer to name it a recession, many people have assumed that our situation isn't as bad as it really is. The truth is, our nation debt is in the trillions of dollars! Luckily, the naming of our problem might inspire the people to care more about the economy. All in all, calling it a recession has aided our country because people now know the severity of our situation and will think twice about making certain decisions. However, it has had a negative impact because now people might not trust the government as much as in the past. A poor economy points towards an incompetent government and in order to resolve this problem, we need the people to trust our government to make the right decisions. Unfortunately, the word "recession" frightens a lot of individuals and this leads to less trust in the government. My suggestion to Bush and Obama is to work together in order to gain the trust of the American public. The fact of the matter is, the people have only seen our economy get worse lately and it is vital that they see it can get better over time. So, the President needs to find a way to positively impact the economy, whether that be creating new jobs in some way or form or trimming off some of the national debt. This way, the public will see that the government can solve this problem and when Obama takes office, we will be ready to turn our economy around.

Sources:
http://www.investorwords.com/1647/economic_surplus.html
http://recession.org/
http://money.cnn.com/2001/11/26/economy/recession/
http://www.capmag.com/article.asp?ID=3691
http://ezinearticles.com/?US-Economic-Recession-History&id=998438
http://www.incontext.indiana.edu/2002/nov-dec02/spotlight.html