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Why the Economy will Crash in 2011

Right now, there is a lot of negative news about the economy. A lot of people are expecting the economy to continue to slide down, and even predicting a double dip recession. This implies that we are still currently in a recession, despite the recent stock market gains. Here are the four major factors for these predictions.
  1. Jobs: The most important factor to the economy is jobs. Across the United States, the average unemployment rate is approximately 10% using the new method of calculating unemployment. Using the old method, unemployment is probably over 15%. Additionally before the end of this year (2010), about half a million census workers will lose their temporary jobs. Even sooner than that because of the oil spill (actually, it is really an oil geyser) in the Gulf of Mexico, possibly hundreds of thousands of employees could lose their jobs in the tourism, fishing, and oil industries. Thus, unemployment is only going to get much worse.
  2. Taxes: First, the tax cuts that President George W. Bush put into place are going to expire at the end of 2010. This has two effects. The first effect is to stimulate the economy in 2010, since investors want to reap their profits while the taxes are low. The second effect is to suppress the economy in 2011, since fewer trades will occur when taxes are higher, thus the government will probably collect fewer taxes in 2011. Second, another reason tax will be going up is because of the new Health Care Reform (HCR) tax. Third, a Value Added Tax (VAT) may also be created to continue funding our big government. As a result, everyone will probably be paying much more taxes in 2011.
  3. E.U. Economy: The short-term effects of the declining E.U. economy should boost the U.S. dollar and temporary help the U.S. companies compete with E.U. businesses. However the long-term effects of the E.U. will also slow down the worldwide economy, since E.U. businesses and citizens will purchase fewer foreign goods.
  4. U.S. Government: The U.S. government favors “big government”, especially with the Democrats in the White House and in control of Congress who typically support large government programs. Keep in mind, that modern Republicans have also favored big government and huge expenditures, such as the two wars. Neither political party seems honestly interested in helping the country’s economy or their constituents by creating jobs, stopping the deficit, and reducing the National Debt. Instead, both political parties and the political system in general favor big businesses and their own money. As a result, the economic situation is dire and will not appear to improve in the foreseeable future.

In conclusion because of these four reasons, I predict the economy will crash again in the Year 2011.

by Phil for Humanity
on 06/18/2010

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