By Jack Harris | Writer
September 20, 2o2o
Interest rates are at an all-time low, the housing market is firing on all cylinders, and the stock market is on a wild uphill roller coaster. However, the economy has been harmed greatly by the current international pandemic, with economic trends mirroring those in the 2008 Great Recession.
The recent passing of a $2 trillion stimulus bill resulted in the government printing new money and distributing it to people in need around America. Historically, printing mass amounts of money has never resulted in good financial situations. Depleting money from the federal reserve results in inflation, and it is very possible that inflation rates will spike in the near future.
“I think the nature of our economy can be very scary for a lot of people right now, but there are also still a lot of opportunities,” senior and economics student Wyatt Lalonde said after being asked what he thinks about a possible recession.
A second stimulus bill is being negotiated in Congress right now. So far, it is uncertain if a second wave of checks will be sent out, even though there are many people still struggling financially from the stay at home orders issued earlier this year. Democrats fear that the second stimulus bill will be beneficial to President Trump, causing thorough debates in what these checks will look like. The only certainty is that many Americans need financial help soon, or we will see a whole new wave of desperate Americans in economic crises.
Interest rates are at an all-time low due to the number of people who are unable to pay their bills on time. Low-interest rates attract many people to take out loans, even if they may not be able to pay it. The housing market in 2008 crashed because of subprime lending, or bad loans, and low-interest rates which can lead right to that same problem: people not paying the money they owe back to the bank. When people can not pay their loans, the banks start to take people’s houses. The bank then has a large supply of homes and there is a subsequent fall in prices, eventually leading to the crash of the housing market. This is exactly what happened in 2008. Right now, the supply of homes is low, which drives up the demand and prices for homes; the housing market resembles closely that of right before it crashed back in 2008.
“I believe the economy has been very good for how many Americans are struggling financially, and that can put us in a really bad situation,” senior and economics student Aidan Giacobello said.
In a press conference this Wednesday, Federal Reserve Chairman Jerome Powell announced that “until we get a vaccine that is in wide use and closely trusted,” certain areas of the economy will still struggle deeply. Congress needs to come to a decision on what this second stimulus bill will look like; the bottom line is that there are people in America right now who do not have the money to sustain themselves. If too many Americans fall into this deep hole of financial instability in these times, we are going to see some very scary things happen to our economy.
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