Not until we sweat out the excesses of the '90s, they say, can we go back to being the world's economic power plant. Such thinking may seem sound to some, but it is nonsense. While the cloud lovers praise the idea of businesses sweating off their excesses, the fact is that a recession of any significance in the U.S. would be devastating to the nation and the world. And there's good reason to believe one is on the horizon. Manufacturing shrank last month for the sixth month in a row, and unemployment climbed in January to 4.2 percent, the highest level in more than a year.
Economists define a recession as an economy that declines for two consecutive quarters.
If the U.S. economy continues this slip into reverse, countries struggling to get up off their knees might wind up back down on the floor. If the U.S. no longer can prime the world economy as it has for the past decade, the chances are even slimmer that a badly stumbling giant like Russia will be able to fight off its own economic woes. Closer to home, if the U.S. economy develops a bad case of the chills, then Mexico comes down with a full-blown flu, and the U.S. no longer is immune from what ails its southern neighbor. The reason is simple. If U.S. businesses trim back their investments and production in Mexico, and U.S. tourists stay away from Mexico's beaches, then Mexico's already fragile economy turns into a horror that job-hungry Mexicans flee from.