Recession in the US? According to the media, we’re far from this, right? Well, maybe. Right now, we’re seeing slow growth that doesn’t get anyone excited, but is actually positive. Will we see slow growth like China, or full blown recession like Europe?
What the media and government don’t like to mention is that the money printing they are doing (via the Fed) is highly inflationary. Thus the cost of goods that you must buy throughout the year costs considerably more than they did the year before. If the cost of goods rise by 4% across the country, and the economy grows by 2%…this is not growth.
This is recession. This is most probably where the US will end the year. We do see it as quite possible that with the breakdown of Europe, Japan, & China, the US sees numeric recession this year as well. That’s still to be determined.
The entire world economy is incredibly linked today and if the rest of the world is suffering, the US will suffer as well. It’s ironic and sad that the US is able to print money at such rates that the emerging economies of the world suffer massive inflation and the country that started it all escapes. But this effect is short term and the consequences do eventually come home. The problems in many of these countries (cost of food, etc rising) brings economic unbalance which has to be resolved one way or another. These problems do come back to hurt the US. Meanwhile, the “first world” has all been pulling the same debt gimmicks as the US more or less and those times are coming to an end.
The US economy itself is extremely diverse. In some areas, it’s fairly healthy. In others, it’s very sick. The pumping of Fed dollars has kept the banks propped up, but the real estate overhand still shadows over the economy keeping it from full recovery. Again, this is not a problem with an easy resolution. And the governments answers are woefully inadequate. Basically, you can’t always have boom times. If you cause economic booms by money printing, you must have subsequent busts to clean out the mess that always results.
Because the US government has spent the last couple decades avoiding busts at all costs by continually blowing up another bubble, the bust that must come now is severe. If they’re EXTREMELY competent at managing the economy, perhaps that can look like an economy that hardly grows for a decade while the excess is worked off without too much drama. If you’ve studied economics or human nature at all, you’re probably aware that that’s not the way things work and that in fact, a severe bust is far more likely. The worst is probably still to come after 2012 ends, but we see this beginning this year.
This is the 25th post in a series. You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here. Here are the rest of the posts: 3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & 
European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.