Chapter 5

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad5QN8Oo7QpA&refer=home
Summary:
The U.S. economy is shrinking at a faster pace than previously estimated as consumer spending plunged, companies cut inventories and exports sank. Gross domestic product contracted at a 6.2 percent annual pace from October through December, more than economists anticipated and the most since 1982, according to revised figures from the Commerce Department today in Washington. Recession is forecasted o persist for at least the first half of this year in United States. Bill Cheney, chief economist said that the economy doesn’t seem to stop shrinking and seems to continue and get worsen till the middle of year.

Connection:
According to the textbook, the shrink of GDP means that the value of final goods and services produced in United States in the last quarter has declined. That is mostly due to the decline of customer spending which is due to the shrink of the companies causes the people begin to save up money to pass through the days that they might be laid off and become unemployed. The continuous decline of the GDP results a drop in economic activity the recession in United States

Reflection:
This is not surprising, my mom has “forecasted” that United States will go into recession when the problems of Mortgages and the credit default swaps in U.S was first revealed, which was two years ago. The shrink of the U.S. economy leads almost the whole world into recession, which might have influenced a lot of people. The Americans are now trying to recover the “disappeared” billions of American dollars, yet I wonder why they didn’t just announce the problem two years ago which wouldn’t roll the problem as a snowball as big as now. Instead of announcing the problem, they use “credit default swaps” to recover the problem, which I can’t tell the differences between their actions with a shopaholic who use credit card to recover another bill.