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'Perfect Storm' Batters US Economy

Unpredictable markets continue to feed stagflation fears

By Jim O'Neill,  Newser User

Posted Mar 14, 2008 12:30 PM CDT
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(Newser) – A perfect storm of economic maladies has the US economy reeling on the edge of recession and officials struggling to limit the damage it causes, reports the New York Times. But many economists say there isn’t much the government or policy makers can do besides batten down the hatches and, in the words of a Charles Schwab analyst, “let the system wash it out.”

Although banks are clearing the worst of the subprime mortgage crisis, other industries are feeling the repercussions. Inflation and unemployment are on the rise as the dollar sinks, driving up energy prices—but also driving out overly leveraged investors. That actually sounds good to analysts willing to ride out the storm. "It's not just a silver lining," one economist says of the shakeout. "It's a platinum lining."

A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver.
A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver.   (AP Photo/David Zalubowski)
High gas prices posted at a Shell gas station in Menlo Park, Calif., Thursday, March 13, 2008. Gas and oil prices jumped again to new highs as the dollar weakened.
High gas prices posted at a Shell gas station in Menlo Park, Calif., Thursday, March 13, 2008. Gas and oil prices jumped again to new highs as the dollar weakened.   (AP Photo/Paul Sakuma)
Prices above $40 dollars per gallon are posted at a gas station in Los Angeles Wednesday, March 12, 2008.
Prices above $40 dollars per gallon are posted at a gas station in Los Angeles Wednesday, March 12, 2008.   (AP Photo/Damian Dovarganes)
A Tokyo money dealer works by a currency indicator showing the U.S. dollar is traded at between 100.77 and 100.82 yen today.
A Tokyo money dealer works by a currency indicator showing the U.S. dollar is traded at between 100.77 and 100.82 yen today.   (AP Photo/Katsumi Kasahara)
A oil pumpjack works outside Glenrock, Wyo., on Saturday, March 8, 2008. Oil prices on Thursday, March 13, 2008 hit a record high above $110 a barrel.
A oil pumpjack works outside Glenrock, Wyo., on Saturday, March 8, 2008. Oil prices on Thursday, March 13, 2008 hit a record high above $110 a barrel.   (AP Photo/David Zalubowski)
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Stricter mortgage rules proposed
Associated Press

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Associated Press

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