Is a Stagnant Economy on the Horizon?

In a news conference today President Bush and Federal Reserve chief Ben Bernanke both agreed that they did not see a recession in the near future. Both have been trying to prevent the countries first recession since 2001, but with the housing market crisis and the rising energy prices, this is becoming increasingly difficult. Bush considered the economy to be in a "slowdown," but not a recession, and the Federal Reserve is predicting increased unemployment and slow growth.

In response to whether he forsees stagflation, Bernanke replied that it seems unlikely despite the fact that there is inflation coupled with slowed growth. He felt that inflation would eventually slow down (and when would that be?), and admitted he was worried about how weak the U.S. economy is right now. Yet with the rising energy prices, inflation seems to be worsening. Instead of spending their money on other commodities, people are forced to spend more money filling up their cars with gas and heating their houses during the cold winter months.

Economic growth has been severely crippled. From July to September of 2007, the economy was growing at a rate of 4.9%. From then until the end of the year, this rate dropped to 0.6%, and is expected to go down to 0.4% by March. For the country to be considering in a recession, a rough estimates states that growth would have to decrease for six months in a row. By this estimate it seems that we are well on our way. All I can say is I hope Bush is right for once.