With the after effects of the stock marketing falling in 2008, and less investments involving risk and the GDP falling. This is when the economy began turning internationally. With imports, exports and foreign investment falling along with the combination of employment and production being cut back this recession affected the global economy. The unemployment rate in the United States began to skyrocket as well. Below is a graph depicting the unemployment rate in the United States during the 2008 recession.
The biggest financial issue that the United States is facing is the current recession we are in. By and large, a recession is a decline in any given country's Gross Domestic Product (GDP), or negative real economic development, for two or more consecutive quarters of a year. During a recession the economy stops rising and starts working in reverse. Instead of adding new jobs, there are jobs being lost. Instead of companies making a capital gain, suffer a loss.
The fall in consumer consumption has had its toll on the GDP as it too has slowed. Again, the economy has continued its growth, but the vigorous rate that it has been cruising along is falling. The US international trade deficit is growing every year revealing the US's dependencies on imports vs. exports. The need for vast imports is not unusual, but the level of exports continues to fall. The Balance of US International Trade in Goods and Services for Jan.-Dec. of 1997 was -104.7 billion dollars and -164.2 billion this year.
Globalization renders our government powerless and leaves them at the mercy of foreign investors. The negative effects of globalization far outweigh and short term gains. Diminishing Middle Class A diminishing middle class seems to be a recurring trend all over first nations, including Canada. The evening news and business reports are bombarded with news of a declining middle class and increase in the number of poor people. There seems to be a pattern of growing poverty that is in relation to a diminishing middle class.
The growth started to slow down after 95.There were many supply-sided and demand-side theories that suggest the reason for this slowdown. The government decided to reduce the liquidity by controlling the CRR and SLR. This caused a credit crunch, which got worse due to government borrowing to finance its revenue deficit. Economists decided that the reason for slowing in growth was due to this credit crunch. Then, two monetary policies, to increase liquidity were introduced.
Also there was a boom in housing in the early 1920’s that led to a surplus of houses, causing the housing sales to decrease. With this, less construction was needed, therefore shrinking the labor force and slowing down the economy. Production would also decrease for the automobile industry because it was an interest sensitive industry. Therefore, jobs vanished from the two industries causing the economy to stagnate. All of this was because of the raised interest rates from the Federal Reserve causing a chain reaction that would slow down the economy leading it into the Great Depression.
Because of the surplus of goods and falling prices consumption becomes more desirable to consumers and the level of consumer spending rises. The fall in prices causes business to become less profitable and producers decrease the level of production. This results in the decrease of the aggregate quantity supplied to decrease. This continues until aggregate quantity demanded equal the aggregate quantity supplied and a period of short- run equilibrium is established. The real GDP and the price level have both decreased from the original long-run equilibrium level and the economy is operating under the full employment level.
during the last financial crisis (here: economic growth numbers hit the decline stage in 2007), especially to be noticed in the year 2009 in the displayed graph, people feel more reluctant to invest their money and tend to hold on to their limited financial assets. Therefore the government increased China’s money supply drastically, which explains the money growth peak of 2009 (28.42%). By increasing and decreasing the money supply China’s government attempts to control the economy. If the growth of the money supply is slowed too much, the economy will slow as well. In times of economic troubles an increase of the money supply intends to stimulate the economy with additional liquid assets.
Once the economy stops growing than we are in trouble for our economy and a possible repeat of the recessions, that has plague our country from the past. When consumer demand for goods and services drops, business revenues decline, and eventually companies have to lay off workers to maintain profit margins. Often there isn 't enough production to keep the workers busy. Over a period of time, the economy experiences many ups and downs this causes
When the crisis became apparent and consumers started spending less, GM’s sizeable book leverage of 0.259 (See Appendix A) multiplied the impact of the crisis on GM. Further impacting GM in 2007 was a new agreement with the Canadian Autoworkers’ union, who refused to make any concessions for GM regardless of the state of the economy, as well as drastically increasing oil costs. Due to these events, GM thereafter experienced major falls in net profit margin and ROA (See Appendix A) in 2007, 2008, and in the first half of 2009. From 2006 to 2009, it can be seen in GM’s increasi... ... middle of paper ... ...d on the other hand, posted a profit. Future Outlook For the past many years, the American automotive companies rode the economic booms and success that was built by them long ago.