Spring Break
Economy's heart gets a jolt from U.S.
Amanda Berens
Issue date: 4/29/09 Section: News
Students who graduate next month will enter a job market fully feeling the effects of the recession, and experts say the end is not near. If the financial system does not recover soon, the recession might last beyond the end of the year, a UA economics professor said.
The state of the economy is not good and it has not hit the bottom yet, said Raja Kali. In the last year approximately 4.4 million jobs were lost, a number which exceeds the last decade's recession.
It's clear that some parts of the economy need overhauling -- like health care and infrastructure. A large part of the problems are because of lack of oversight; more regulation is needed, Kali said.
Whether the recession ends in 2009 depends on whether the financial system stabilizes, Kali said. Even if it recovers this year, the economy might not feel the signs of recovery until next year.
The massive economic stimulus package is designed to revive consumer spending and factory production, but it will not necessarily end this recession earlier.
"It's like a jolt to the system; it will provide a short term boost to the economy, to get things moving again. The economy is in a negative spiral, [and] needs an external stimulus, like in cardiac defibrillation, the economy [needs] a jolt back to life," Kali said.
The financial system still has to recover and the stimulus alone will not be enough. However the government is taking a multi-pronged approach and being very creative in fiscal policy and monitor policy, Kali said.
To guide the planned regulatory overhaul, the Federal Reserve Chairman Ben Bernanke laid out four key elements. One of the most important elements is addressing financial institutions considered too big to fail, including setting up a system to aid troubled firms.
The U.S. must rewrite its regulatory system to prevent a repeat of the current financial crisis, the worst since the 1930s, Bernanke said in a speech to the Council on Foreign Relations on March 10.
The unemployment rate in March 2009 was 8.5 percent and an unemployment rate of more than 10 percent could be possible before the recession is over, Bernanke said.
One freshman, whose major is interior design, worries that her career might not be in demand after she graduates.
"If people are short on money due to the economy, they will find ways to redesign their homes on their own rather than hire someone. People might not want to spend money on [more] luxurious things like [that]," Denise Hawes said.
However Hawes will keep her plans to do what she loves despite the recession.
Students might be worried about their futures, but the economy will recover, it just might take time.
The state of the economy is not good and it has not hit the bottom yet, said Raja Kali. In the last year approximately 4.4 million jobs were lost, a number which exceeds the last decade's recession.
It's clear that some parts of the economy need overhauling -- like health care and infrastructure. A large part of the problems are because of lack of oversight; more regulation is needed, Kali said.
Whether the recession ends in 2009 depends on whether the financial system stabilizes, Kali said. Even if it recovers this year, the economy might not feel the signs of recovery until next year.
The massive economic stimulus package is designed to revive consumer spending and factory production, but it will not necessarily end this recession earlier.
"It's like a jolt to the system; it will provide a short term boost to the economy, to get things moving again. The economy is in a negative spiral, [and] needs an external stimulus, like in cardiac defibrillation, the economy [needs] a jolt back to life," Kali said.
The financial system still has to recover and the stimulus alone will not be enough. However the government is taking a multi-pronged approach and being very creative in fiscal policy and monitor policy, Kali said.
To guide the planned regulatory overhaul, the Federal Reserve Chairman Ben Bernanke laid out four key elements. One of the most important elements is addressing financial institutions considered too big to fail, including setting up a system to aid troubled firms.
The U.S. must rewrite its regulatory system to prevent a repeat of the current financial crisis, the worst since the 1930s, Bernanke said in a speech to the Council on Foreign Relations on March 10.
The unemployment rate in March 2009 was 8.5 percent and an unemployment rate of more than 10 percent could be possible before the recession is over, Bernanke said.
One freshman, whose major is interior design, worries that her career might not be in demand after she graduates.
"If people are short on money due to the economy, they will find ways to redesign their homes on their own rather than hire someone. People might not want to spend money on [more] luxurious things like [that]," Denise Hawes said.
However Hawes will keep her plans to do what she loves despite the recession.
Students might be worried about their futures, but the economy will recover, it just might take time.
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