With the next U.S. Presidential election coming up, there are plenty of arguments being made as to what is best for America as a country.
One of the hottest arguments this election is over the economy. However, this topic has been hotly debated since the economy took a nose-dive in 2007 and has yet to fully recover.
Outside of election circles, many people believe that this global economic downturn will certainly result in the collapse of the U.S economy. While, on the other side of the fence, there are a whole host of economic optimists who claim that the U.S economy is not destined to fail at all.
However, the big question is which one of these economic predictions are right? And, if the doomsayers are correct, when will the almighty dollar fall?
The Theory of a U.S. Economic Collapse
According to the doomsayers, collapse of the U.S. economy is imminent. Some even contend that the proof is in recent events.
Don Koenig of ThePropheticYears.com claims that he has been predicting this exact scenario, an economic crash caused by world debt, since 2000. He starts his article with a 2012 update, stating:
“I actually wrote this article in 2000 . . . but it is now 2012 and what I said about what would be coming has now partly taken place. Even so, the economic crisis is far from over (It will get worse).” (1)
The article goes on to state that the combination of Americans, individuals and corporations, living beyond their means, coupled with the investment practice of “gambling” with investments is a quick path to economic ruin.
Koenig is not alone in his predictions.
There is an entire blog dedicated to the economic collapse, called TheEconomicCollapseBlog.com. In one article there, The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See, the author lays out a list of 70 reasons why he believes the U.S. Economy will collapse.
In that list of 70, the author cites that 53% of college grads could not find work, 60% of Americans claim that they cannot live comfortably on their salary, and credit card debt has risen 81% since 1989. (2)
These figures, along with the other 67 items, supposedly prove that the U.S. economy is on track to certain demise. The author claims that he only cites Obama in the article, not because it is entirely his fault, but because the President is cheering the loudest that the country has recovered.
In fact, some doomsayers contend that Obama is completely to blame.
Predictions of Economic Doom
One such doomsayer is Rush Limbaugh. Despite the extreme of his politics, or the reality of his pain pill addiction, the fact of the matter remains that the man has a national radio show with millions of listeners.
Currently, those listeners are hearing Limbaugh’s opinion about how four more years with our current president will lead America down the path of economic doom.
Recently on his show, the radio host bluntly stated, “The country’s economy is going to collapse if Obama is re-elected.” (3)
To support this, Limbaugh cites overspending on welfare and an ever-increasing national debt as the main reasons for America gloomy economic outlook. He doesn’t claim that he knows when this will occur, but he is certain it will happen during the next presidential term if Obama is re-elected.
“I don’t know how long — a year and a half, two years, three years.”
However not everyone is all doom and gloom about our current economic situation.
An Optimistic Perspective
Pragmatic Capitalism proposes five reasons, supported by ING analysts, that point to the unlikelihood of an economic collapse.
The article does state that the economy will not bounce back immediately, but also states that it will not collapse entirely either. Their prediction is that the economy will slowly limp along as it heals. Those reasons are:
1. Housing sector and the auto sector are already weak and are unlikely to contract much more.
2. Household balance sheets have improved since the global financial crisis.
3. The trade deficit is likely to narrow due to slower import growth.
4. Decline in commodity prices will check headline inflation and could lift household purchasing power.
5. Investors fears are based on their most recent experiences. (4)
Another economic optimist is the National Review. Larry Kudlow, the National Review’s Economic Editor, wrote an article earlier this year stating that the “Economy will not collapse, nor will stocks.”
In his article of the same title, Kudlow believes there are several factors that point to a slowly recovering economy:
“ISM indexes in the mid-50s are still reasonably strong. Consumer confidence has been rising. Jobless claims have been falling. Car sales are solid. And chain-store sales are beating expectations. It still looks like a 2.5 to 3 percent economy.” (5)
Similarly, the article paints a picture of a hobbling economy on a slow – very slow – road to recovery. Not a great picture, but better than one being painted of an utter economic collapse.
So, the $64,000 question is: who’s right?
In this case, you have doomsayers side of the story and the optimist side of the story, but chances are the reality lies somewhere in the middle.
Total collapse of the U.S. economy? Probably not. Fast track to recovery, highly unlikely. Slow lumbering economic recovery with an occasional setback, most probable scenario.