| Effect in other sectors |
As of December 2008, the contagion was starting to spread to other sectors. The realty sector, not just in the US but also all over the world, China, India, UK was experiencing a downturn. The state of the automobile industry has already been described above. The IT industry, which had the financial sector as one of its main client industries, is also set to see a slow down.
Shrinking incomes and job cuts have badly undermined consumer confidence, so that the retail sector is also badly hit.
Across the industries, the story is the same. There is hardly is sector that would not see a slowdown (if you discount astrology and star gazing).
We are yet to feel the full impact of the recession that is only now setting in.
The last great economic crisis of this century, the great depression of the 1930s continued for nearly a decade. The economy finally lifted with the onset of the WW II.
Unless the US decided to attack Iran, or India decides to invade Pakistan, there doesn’t seem to be another war around the corner. And frankly, the theory of the potential of a War lifting the economy also seems to have worn off with the passage of time.
One must bear in mind that the US economy never went back to the pre Civil War production mode when the Civil War ended, or to the pre World War II mode once the second World War ended.
In that sense, and by the standards of those times, our production level is already in war time mode. There are other things that we must bear in mind. The high growth of the 90s was achieved by the boom (some say bubble) in the technology – mainly computer – sector. When that bubble burst, it was quickly replaced by the realty bubble, which kept the economy going for another 7 years. There doesn’t seem to be another sector which can create a quick bubble. So this time there would be no steroid pill to pull us back.
What we need to do now is look at our long term needs and consumption patterns. Our consumption has been kept artificially high, through several ‘bubbles’, so then this is an opportunity to bring it down to a saner level. This is the solution that would also solve the problem of global warming, which is being fuelled by out high production, high consumption pattern. After all, there is always a positive way of looking at things!
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