The United States is on the brink of recession.

Khan Mohabbat, a professor in NIU’s economics department, said a sure sign of a recession is a drop in the stock market over a period of several months. Mohabbat said the drop will “usually precede a recession by about six months.”

Mohabbat said presently the stock market has been going down steadily since August, when the Dow Jones Industrial average was at a high at 2800 points. It now is in the 2400s.

He said if leading economic indicators occur for three straight months, a recession might be emminent. The indicators are inflation, a falling stock market, higher interests rates and a decrease in the value of the dollar. However, unemployment is said to be a consequence of a recession rather than a cause.

Some economists believe the country is in a recession now because the economy is said to be “soft” or stagnant. Interest rates have risen, causing a decrease in construction and major corporations are showing modest profits at best. Also there has been an increase in lay-offs recently, Mohabbat said.

He said the gulf crisis is a direct cause of the sagging economy, because it is “energy based.” He said during a recession, prices will rise due to a decrease in the value of the dollar.

With a rise in prices, purchases drop, which causes manufacturers to cut back and lay off workers. The laid-off workers then can no longer purchase products, which causes the prices to rise and more lay-offs to occur due to the contiuing drop in sales.

In the past, the dollar has always risen in value during a crisis such as the one in the Persian Gulf. This time, however, it is falling.

Mohabbat attributes this to overseas investors not having faith in the American economy. They are investing in other currencies such as the German mark or Japanese yen, he said. “The loss of faith is because of the rising budget deficit,” Mohabbat said.

He said the difference between the budget deficit and the national debt is that the debt is the total owed by the government while the budget deficit is the yearly debt of government spending.

This year’s budget deficit will be added to the national debt, which is in excess of $3 trillion, while the deficit is in excess of $9 billion.

Mohabbat said the budget deficit also keeps the Federal Reserve, which controls the printing and circulation of money, from “loosening up” and allowing more money to enter the economy. This causes a “tremendous upheaval in the economy because of higher interests rates,” Mohabbat said.

Mohabbat said the “deficit should be reduced to a managerial level. It can’t be done by cutting back or reducing legitamte programs like social security.”

He said it could be done if the income tax structure were changed and defense spending reduced. Mohabbat said if the millionaires’ income tax bracket were increased from 28 percent to 30 or 40 percent, the deficit possibly would be able to come under control.

The deficit hasn’t been kept at a controllable level because congress hasn’t been able to agree on the appropriate action to take, Mohabbat said. The Democrats refuse to allow any programs to be cut while the Republicans refuse to allow any increase in the income tax. Mohabbat said the increase “would not kill anyone.”

He said some middle class tax payers are actually better off paying higher taxes, because they can claim more on their tax returns.

Michael Athey, another economics professor, said a downward trend in the economy would “adversly effect those recent college graduates hoping to enter an area of business.”

Athey said “in general, the effect would be adverse,” but that it would depend “on the individual and the field they were planning to enter.”