Are we in recession and what effect will it have on the middle class - Research Proposal Example

RECESSION The proposed report will explore the question of whether the recession in the US is really over, and if so, what its effects have been on the middle class. The role of the impacts of taxes and credit limitations on consumers is also a major factor in the current situation that the US middle class is facing. As one source notes in a summative manner, “The mix of tighter credit, the double hit to buying power from fewer jobs and higher prices for energy and food, and shrinking household wealth are killing demand for big ticket items and organizations.

The role of the commercial bank is considered by consumer goods such as homes, cars and other discretionary purchases” (Cooper, 2008). This shows how many factors can work together to create a holistic idea about the current state of the economy. Many look to the mortgage industry and its impact on financial sectors for a more specific answer. The mortgage industry is currently affecting the consumer and banks in complicated ways. There is a lot of media coverage about it and there is at times the atmosphere of panic, with economists over-valuing the impact of the current mortgage industry and also predicting things that are in no way true.

However, a recession is denoted by six months’ continuous drop in GDP, whereas the GDP has actually grown in recent quarters. Therefore, the impact on the consumer may be over-valued, but in any case, the recession has left lasting effects. “Home prices are now deflating at a 32% annual rate versus 8% six months ago. And the deflation is sure to intensify as the 4.6 million new and existing homes still sitting on the market find a clearing price” (Up, 2010). The mortgage industry currently also affects other zones of enterprise other than the middle class consumer, such as financial intermediaries including commercial banks.

This is perhaps the most common kind of financial intermediary and the one with which the average middle class consumer is most likely to be familiar with. REFERENCE Cooper, J (2008). Services: Heavyweight in a hard fight. Businessweek. Up and Down Wall St (2010). Barron’s.