Why USA is going into recession ?

Will USA go into recession

United States of America boasts of being the largest economy in world with Gross Domestic Product (GDP ) as estimated in 2006 reaching at peak of more than US 13 trillion with the GDP increase by only 2 .2 percent and now it has also become world 's biggest country in debt . Year 2007 witnessed substantial slowing in annual average GDP growth due to the housing downturn and credit crunch and it is estimated that GDP will weaken further in 2008 , as growth is expected to fall to 0

.8 in 2008 which will only lead to recession in country 's economy (Country Data 2008

60 per cent of economists think that United States would recover from crises of recession , found out by Bloomberg News but 40 per cent of the economists at Goldman Sachs , Morgan Stanley , JP Morgan and Merrill Lynch are demanding for the cut in the interest rates as they are predicting recession to sure to enter United States Economy (Macklei , 2008

In its statement to the Times in 2007 , Professor Shiller , co-founder of the S

Case /Shiller house-price index stated that American real estate values have already lost around 1 trillion [ ?503 billion] . That could easily increase threefold over the next few years . This is a much bigger issue than sub-prime . We are talking trillions of dollars ' worth of losses (Jagger , 2007 ) There is very little doubt that the economy of United States is showing a downward trend . Its proof lies in the fact that the economy of United States has only added to its list 17 ,000 non-farm jobs previous month , and the season sales during holidays have shown the lowest trend in last five years . More over economic view indicates the ISM (industrial production ) index too is showing all over fall to below the 50 level , and the position of mortgage market is also not so positive . With continuous increase in inflation rate , individuals and families were forced to follow the low down payment or in low interest mortgages , making it difficult for them to repay . Now they are eager to sell their property at a faster rate that can lead to supply increasing the demand , which will bring down the prices of homes and condos and moreover the slow down of residential and commercial construction will further dampen the economy

Another biggest factor to dampen the economy is the rise in prices of crude oil resulting from the crises of Middle East , America 's interference in Iraq and increase in demand of the oil especially from China . Rise in prices of crude oil is bringing about the increase in the cost of production and reduction of profit level adding burden on the production and consumption level in the domestic sphere . But here optimistic note lies in the fact that economic slow down can in turn reduce the prices of oil (Armentano 2008

Third Factor is devaluation of dollar in the international money rate owing to Iraq War...