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US Slipping Into New Recession. How Bad Will It Be?

As usual, I woke up early this morning and the first thing I did was to have my cup of hot black coffee and my Sunday Times in front of me. I was attracted to a page with a main heading “US could slip into new recession”. Another heading reads “Japan plans $200b recovery programme”. The economic woes in US, Japan and especially Europe are forming a new picture of a global economy quickly turning bleak. Many economic news from US this year are also not encouraging. Unemployment remains at a high of 9.2%. These are signs pointing to the world’s largest economy slipping into a new recession in the next 6 to 12 months. Probably, it is not a question whether US could slip into new recession, the question now should be “How bad could things be?”

In fact, Singapore is beginning to face growth headwinds. The unemployment rate in the second quarter edged up to 2.1% from 1.9% in the previous quarter. Employers are also becoming cautiously optimistic about business prospects in the second half of the year. A new recession in US will surely impact Singapore six months down the road.

The US government is racing against a debt default this coming week. Will the Democrats and Republicans be able to strike out a deal before the debt-limit deadline is anybody guess? Even if a deal is reached, there will be significant spending cuts and these would not generate growth in the next 6 – 12 months. I have the feeling that US will default this week before a compromise is reached over the next few weeks. So be prepared for shock waves this week!

Japan is also working out an aggressive spending plan over the next 5 years hoping to bring about a swift recovery after its recent natural and nuclear disasters. The euro zone crisis continues to worsen. All these signal a “Global Economy Likely To Slow For The Rest Of The Year“.

On a lighter note, I noted another heading which reported that Apple has more cash to spend than the US government. While taking another sip of my coffee, one funny thought came to my mind. (Hhmm…) Maybe the US Treasury can consider borrowing money from Apple. Hahaha !!!

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Charlie Heng

It's my wish to bring Peace and Smile to everyone who reads my blogs. I love all of you. In every thing, give thanks!

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