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Posts Tagged ‘recession’

Is This Recession Worse Than Past Recessions?

Rising food and gas prices, falling home values and more job losses are making readers pretty gloomy. So just how bad is the current economic slump compared to other downturns?

There have been five official recessions in past 35 years. The most recent ones were fairly mild. So if you were born after 1965, you haven’t been through a nasty recession as an adult. Yet.

The source of the current downturn is very different — and may be as difficult to manage.

The current slump began with the overstimulation of consumer borrowing by both the Fed and the financial services industry. We’ve all borrowed to buy houses, cars, college educations, home remodeling, vacations, etc.

Now with home prices falling, we no longer have the home equity to borrow against. We have to pay off the bills from all that borrowing before we can spend again.