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The United States Recession Is Inevitable

The United States Economy is going to fall into a recession, the question is not if, but when. In the last several months we have seen an overall decline in the economy and the stock market. President Trump spoke with multiple news outlets last week saying, “The U.S Economy is doing great.” The fact of the matter is what he is stating isn’t entirely true. The president is saying these statements so citizens do not get frantic and make the problem worse. President Trump recently stated he hopes to lower Federal Interest Rates from the current 2% to at least 1%. This is so he can try to get U.S citizens to apply for loans and borrow money from the government. The main problem is that the current interest rate is already so low that people will not have an incentive to apply for loans due to a 1% decline. Economic analysts are saying that reducing the interest rate from 2% to 1% will not help the economy.

What President Trump should be doing is trying to compete with China rather than putting a tax on products. Our country needs to compete to match China’s production ethic; in my opinion that’s the only way we can start saving money and stop losing billions to China every year. As we also look into the GDP it is at 1.9% and if it hits 0% for 2 straight quarters we will go into a recession. The United States as been long overdue for a recession and now time has come. The United States has piled up so much debt and loans the Federal Government will not be able to bail us out this time. It was also announced that he wants to have payroll tax cuts for every American. This will create a temporary gain in the overall market, but it is not a long term solution. Cutting payroll taxes will buy the president time till 2020 to keep the economy from going to a recession. Federal Reserve officials are divided with President Trump’s ideas and government officials are not supporting him.

President Trump also believes that having a trade war and placing tariffs on China will help the economy and reduce deficits, but the country is seeing that it’s only causing problems. With tariffs on Chinese goods the American people are the ones that are suffering and paying more money for a product then they originally did. An example is if one year ago a toothbrush from China was 2 dollars, now with Trumps 25% tariff that toothbrush costs 2.50 dollars. The tariff affects the average American citizen, as the economy slows down these tariffs will only speed up the process. We will have Americans buying fewer products in local stores because of price rising. The more people contribute less to the market when a recession starts to form.

What President Trump should be doing is trying to compete with China rather than putting a tax on products. Our country needs to compete to match China’s production ethic: in my opinion that’s the only way we can start saving money and stop losing billions to China every year. As we also look into the GDP it is at 1.9% and if it hits 0% for two straight quarters we will go into a recession. The United States as been long overdue for a recession and now the time has come. The United States has piled up so much debt and loans the Federal Government will not be able to bail us out this time.

When we look at the rates for long term and short term bonds right now the country has an inverted yield curve. This means that interest rates on short-term bonds are higher than the interest rates paid by long-term bonds. People are so scared of the economy that they are putting their money into much safer long term investments. This will drive the economy to slow down and create the recession. My predictions are is the United States Economy will keep declining at a slow rate but will eventually hit in a recession in 2020.

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