Is this 2008 recession going to be different than the rest?

The experts say that America needs to be prepared for a new kind of recession. Is this true, or is another case of media melodrama? What’s the difference between our current economic situation, and the other recessions Americans have faced?

A normal political reaction to a recession is for the Federal Reserve to lower interest rates, as the president and Congress cut taxes and hike spending. This gradually creates an increase of production and loans. The members of Congress decide which taxes to cut, and which projects should be funded, usually having to compromise their ideals on both sides to make the American public feel at ease. Economic stimulus packages tend to help America weather the storm of a recessive period, and bipartisan efforts usually help to balance needs against partisanship.

So why do experts say things are different this time around?
In the past, families have tended to have one spouse at work, and another at home who would go to work to pick up the slack during hard times. Real estate values in the past continued to rise, but right now, housing values are plummeting and many banks are left owning foreclosed, empty properties. Costs for basic necessities, including gas, school, and health insurance have risen in the past few years, and many consumers are already struggling with expenses they can’t readily bear if they lose their jobs. Delinquency rates on credit, loans and mortgages have all been rising steeply for the past year.

Much of the talk of a long-term recession is alarmist, however – and while our economy is headed for a downturn, there is no direct evidence that this recession will last any longer than any of recent years. While many people have to have two working people in one home, birth rates have gone down, and many middle income families still live with disposable income. Not every homeowner fell prey to variable interest mortgage loans and not every home is going to go into foreclosure. In fact, those who have been saving money for investment purposes or more affordable real estate options now have many more choices for their down payment money. While some people will lose money or jobs, it is specific industries that tend to bear the brunt of a recession. Real estate is already having this problem, as well as the lenders who chose to dole out variable rate mortgages like candies. More people will have to rent in the future once they experience foreclosure – but that means that more landlords will be getting income in the long run.

Money doesn’t just disappear – it’s always funneled to other places.

So, yes, this recession will be different, but that doesn’t mean it will have to be long-lived. Industries will have to adapt to savvier consumers that aren’t going to make the choice to be able to live off of credit or loans they are not sure they can afford. Realtors will have to help people find homes that actually suit them. Other industries will have to flourish – which is always inevitable as long as people continue to work, invent, and innovate. And whoever our newly elected leaders are will want to work on new, creative ways to pick up the governmental slack.