Summary This article discusses the impact the possible impending recession will have on the U.S. and the world, and if the emerging markets are now strong enough to save the world economy. It starts by saying, while most economists do not forecast a recession in America, economists have been proven wrong time and again. The latest estimates conducted by the magazine show that a recession is not very far off. Even though GDP grew at 3.9% annually in the third quarter of the year, some indicators show that the economy will come to a standstill in the fourth quarter. Consequently, by early 2008, output and employment will be significantly lesser. The article attributes the main cause of this recession to be the “imploding housing market”. Housing prices have fallen and residential investment has virtually stopped. The low house prices and the subprime credit crunch have combined to make borrowing against capital gains impossible. Consumer confidence has already fallen and this will soon begin to affect consumer spending, which accounts for 70% of GDP. According to the authors, the only way this recession might not turn into a global economic downturn is if the emerging economies, with an annual growth rate of about 7%, act as “rescuers”. They are in strong shape financially, are independent and most have small budget deficits. Hence, while global growth will decrease due to the recession in America, it will still manage to surpass its 30-year average of 3.5% because of these economies. However, the dynamism of emerging economies spells out bad news for America as it prevents oil prices from falling and weakens an already-weak dollar, and might cause the world to question its need for this currency. Analysis The article forecasts a recession which seems more likely with every passing day. The reasons for the contraction in growth outlined in this article, namely the massive spillover from the housing slump, turmoil in financial markets, and higher energy prices, are all valid and point towards a possible recession in the coming months. Job creation has already slowed down and the subprime credit crunch and decline in investment in the housing sector is likely to affect every household in America as the country heads towards a recessionary phase. The author has also linked the overall slowdown of the U.S. economy with its impact on the global economy and has concluded that in most probability, the emerging economies will be able to save the rest of the world from an economic collapse due to their financial growth and 50% stake in the world’s GDP. The author belongs to the optimistic school of thought which believes that now more than ever, emerging economies are in a very good position to sustain the global downturn and strong enough to respond effectively. However, the author has failed to incorporate the huge demand which is present in the U.S. and Europe, which is responsible for the dynamism in Asian economies. Asian economies are largely dependent on exports and investment, and the investment in itself is dependent on exports. Hence, if the U.S. is hit by a recession, the consequences might be graver than the ones portrayed in this article since Europe