By Julie Bryant

Feb 4, 2008, 10:42 

College Station, Texas - February 1, 2008 Over the past few weeks there has been more and more talk about the odds of a recession in the United States. Economist’s opinions are mixed as to whether we will have a recession, but all agree that, at the least, the economy is slowing and headed towards slower growth.

Whether an economic slowdown or an actual recession, both have implications for the broader horse industry that are worth considering, says David P. Anderson, PhD, Texas AgriLife Extension Economist at Texas A&M University.

Recession

Recessions are defined as negative economic activity, as measured by GDP, lasting more than a few months, spread across the economy. That means that the economy actually shrinks in size during a recession. The last recession took place in 2001.

Annual GDP growth has averaged about 5 percent, in current dollars, annually, over the last decade. This growth has been fueled by rising worker productivity, stable prices, a lack of inflationary pressure, falling real prices for some goods, and the expansion of new technologies and new products.

“This economic slowdown can be traced, probably first and foremost, to the rapid rise in energy prices,” Anderson said. “Over the last 3 years, oil prices have more than doubled to $100 per barrel. Gasoline and diesel prices have risen from $1.00 to over $3.00 per gallon. That increase in price has the effect of reducing the amount of money consumers have to spend on other items.” Since consumer spending is, roughly, 70 percent of GDP the resulting change in spending should be expected to have an effect on economic growth. In addition, nearly everything we buy is transported to its final destination, sold in stores lit by electricity, and is produced using higher cost energy.

Read the full article at http://www.bridleandbit.com/artman/publish/article_21030.shtml