Economic Recession in 2013

by Daniel Downs

A recent article by Charles Gave of GaveKal reports Germany entering a recession. His initial analysis points to a mild recession for Germany. However, the impact of a stagnant recessionary German economy would result in a secondary depression on the southern nations of Europe. For Germany and the EU, the repercussion of such a depression could result in a much more severe recession for strongest EU economy. If that happens, Gave predicts the EU would break apart.

Of course, a German recession would have a negative impact on the U.S. economy, according to the Fiscal Times. Because exports to Germany and other European nations would diminish, our economic would also slow down possibly to greater recessionary levels.

The latest update to U.S. Budget and Economic Outlook projections by the Congressional Budget Office (CBO) predicts a recession in 2013. While the CBO estimates the national budget deficit to decline from $1.1 trillion to $641 billion, its analysts also estimate a decline in real GDP of 0.5 percent. At the same time, they predict unemployment to rise again to 9 percent.

The CBO projections for 2014-2017 show slow but steady improvement. By the end of 2017, they predict the rate of unemployment to have decreased to 5.7 percent. While the unemployment is expected to decline, the growth rate of the national economy is expect to increase to 4.3 percent.

Of course, CBO projections are dependent on the policies made on Capitol Hill and the economic conditions of those nations who buy our goods and services and invest in our capital markets.

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