"The Crystal Ball"

Recession occurs when there is a fall in economic growth for two consecutive quarters.
This can be seen in stock markets, employment, consumer behaviour which are evidence for a gentle recession.

In previous recessions when consumer spending have decreased the recession have been more serious.
This is easily presented in today’s recession looking at US consumer spending. US has a tradition of high spending amongst the population but today consumers tend to spend less.
Another evidence for recession is that the state and government also starts to cut back on costs and spending which is an effect of declining tax revenue. This is important to consider because state and local government represents 11 % of the GDP.

US is one of the developed economies that has and will suffer most. This is because of its particularly change of behaviour in consumer spending because they have a tradition of spending which in the crisis has decreased.
Also you can see a trend of foreign investors cutting back their investments in the dollar and other US assets.
This will of course have an impact on the economy of US which is affecting stock prices, bond are rising which would increase mortgage rates and effect the already trying housing market.

UK is also one of the developed economies that will suffer most of the crisis. Sources says UK will enter recession during the second half of this year.
Organisation for Economic Co-operation and Development (OECD) has predicted that the economy will be shrink by 0.3 % in the third quarter, and by 0.4% in the fourth.

Other developed economies that are likely to be affected are Japan, Germany, France, Italy and Canada.
The reason why these developed economies will suffer the most is because of international trade and therefore they are affected noticeable.
The financial condition has a negative impact on these developed economies because of lower supply of credit and increases in prices.

A developed economy that will suffer least I think is Australia.
Evan tough Australia’s annual economic growth has slowed they are more safe than UK, US, Japan, Germany, France, Italy and Canada are from suffering from the crisis.

This is because of lately the Australian dollar has fallen from being parity with US dollar now Australian dollar can buy US dollar for about US80c-US85.4c.
Australia is gaining on travellers visiting their country. Also exporters benefits from the currency’s fall.
Of course there are always two sides of the story. Australia is not totally immune to entering recession, I don’t think any body is completely safe.
But in comparison to other developed economies they are in better place thanks to its currency and will therefore suffer less.

Most economists believe the recession will have a short downturn and only lasting two or three quarters more but of course you never know.
If looking at unemployment for example it is higher than during previous recessions. Economists prevents that unemployment might increase to 7.5% by the beginning of 2009.
This is because during the recession in 1980`s and during the depression social help like unemployment benefit funds were not existing in the same extent like today. People doesn’t suffer too much from unemployment today.
Another reasons to believe the recession is here to stay is the reports of the world’s banks are presenting on the economic pullback.
Because of the losses in the sub prime loans they are not able to provide companies and consumers with large loans.
So buy lowering the interest rates which was one of the resolutions of recovery from 1980`s recession may not work in this case because in today’s recession it is hard to get a loan to help the business or consumer to start spending again.
So how this recession will end have to be in another way.

I believe the recession has to have an end in 2009, as the US dollar is getting stronger the economical situation will become stronger too.
Also I think there is an psychological factor that plays a part in the recession.
People had less confidence in the banks which and consumption fell.
The media played its part by constantly informing about the recession it might have been drawn out of proportion. The banks need to regain the confidence of the people and consumption will increase and recession will end.
Other reasons for ending the recession can be the change of president in US that can cause changes in the economic situation.