Many industries are downsizing or simply going out of business. Thousands of people are finding themselves with either reduced hours, reduced wages or simply without a job. You may hear the terms “economic recession” tossed around a lot by the media and politicians but what does that really mean to you. It is obvious that the world is experiencing some hard times, especially the United States, so gathering all the information you can about recessions is absolutely crucial. This article will cover some of the basics regarding recessions. It can answer many of your questions and give you a general knowledge about what a recession is and how you can better prepare yourself for the times ahead. Don’t count on a quick income bluePrint to bring you cash. However, sometimes just knowing what is happening with the economy can give you peace of mind that eventually it will end and things will get better.
What is an economic recession?
An economic recession is a period of time when the economy has slowed down over a specific period of time. The time can vary as can the severity of the recession. Currently it can be said that the United States, and indeed most of the world, is going through an economic recession. During recessions you will see people losing their jobs or having their income cut, business profits will fall and even investing will fall off dramatically. Money becomes tight for everyone and sometimes the prices of items either go up or just simply become unaffordable due to the limited incomes. As more people lose their employment as businesses cut back on employees it causes further problems with the economy and spending.
How heavily does the stock market play in an economic recession?
Stock markets do play a role in an economic recession but not in as much of a way as you might think. Though there usually is a decline in the stock market before a recession, the majority of stock markets falling occur after the recession is actually well in place. This is because people no longer have the credit or the excess funds to devote to stock market trading.
Is the United States considered to be in an economic recession right now and if so, when was the last time?
Yes, the United States is now considered to be in an economic recession. But it has not been the first time nor will it be the last time. Since 1854 there have been 32 economic recessions. The last one occurred between March 2001 and November 2001 which only lasted 8 months. Prior to this recession, since the 1980’s, there has only been one that has lasted longer than 8 months and that occurred during July 1981 and lasted until November 1982. So far the recession the United States is in right now has lasted 20 months. It started in December of 2007 and so far economists have not given a clear date that they expect it to end.
What are the effects of an economic recession on the average consumer?
The very first effects that you see are in regards to credit. As the price of things rise, more people will turn to credit. Then you will often see jobs being cut, moved overseas or people having their earnings cut. That means that they are no longer able to afford their credit payments which can lead to loss of earnings by the credit companies. More people will see that it is harder to obtain credit due to those that have been forced to declare bankruptcy. People will have to start tightening their belts just so they can pay for their basic necessities. And as businesses lose more customers this means they will have to start laying off more people. As you can see it is a vicious cycle.