Normal spending will help avoid recession

Remember in “It’s A Wonderful Life” when everyone ran to the bank to pull out their money so they could save it?

aimlerChrysler announced Monday it was slashing 26,000 jobs in the United States. Then Amazon.com announced Tuesday it was cutting 1,300 jobs, or 15 percent of its work force.

These two announcements come only weeks after such companies as America Online, Time Warner, J.C. Penney and Sara Lee announced they would also be cutting back their work force.

All of these companies have blamed many fourth-quarter losses for their cutbacks, and this was the only way for the companies to contain costs.

The big problem here is whether consumers will become scared and stop spending their money, sending the nation into a recession.

Alan Greenspan, the federal reserve chairman, has already said he will cut back interest rates in an effort to spur consumers to spend instead of save.

There are two main factors to why big companies have started a slowdown. One, in the case of Amazon.com, is that the dot-com craze has come and gone. The end of this phase resulted in the loss of over 13,000 jobs at the beginning of this year.

Second, many of these companies produced way too many products during the economic boom and are now chin deep in products they can’t sell. This means they will stop making more until they sell what they already have.

What this all comes down to is either consumers will become scared and stop spending or they will act like nothing is wrong and continue to spend as usual.

The second option seems to be a better choice. A recession might start with big companies, but it can be stopped by the consumers.

Many of you and your parents still have your jobs. Unless of course they worked for a dot-com ... but even the majority of them have found jobs in the computer industry.

Company cutbacks may seem to be the biggest problem in the business world these days, but Americans cannot let that scare them into taking everything they own out of the banks and hiding it under their beds.

We have to trust that our government will take care of these problems. We still have a projected $3 trillion in surplus, which the government will try to use to aid tax cuts.

So, go out and buy that new Porsche Boxter. And remember: As long as you go out and buy the products you want, the companies will continue to make them. This in turn leads to them hiring more workers, and a recession might actually be avoided.

Associate News Editor Hemi Ahluwalia is a junior broadcast journalism major from Stephenville.
She can be reached at (h.ahluwalia@student.tcu.edu).

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