What is a recession? A recession is declared once the GDP is negative for two consecutive quarters or more, a few quarters before is actually the start of an economic downturn. GDP is defined as gross domestic product and that basically means the total value of goods the United States has produced, for the year. The first few signs of a recession are negative growth followed by a miniature positive growth. Because American citizens don’t have the money to spend they don’t spend and the consumer spending aspect of the economy takes a drastic downfall.
The most important of which is consumption. Consumption in the United States has been less than expected mainly due to low consumer confidence. Consumer confidence has hit a 10 year low with an index of 106.8 as reported by Alan Greenspan. In the past 2 months the index number has plummeted nearly 22 points, the biggest decrease since the 1990-1991 recession. The reason for this recent drop in consumer confidence is due to several key factors.
Lucent Technologies Inc. CHICAGO, April 24 (Reuters) - Struggling telecommunications equipment giant Lucent Technologies Inc. on Tuesday reported a $3.7 billion second-quarter loss, yet its stock surged as much as 22 percent on optimism its long-awaited turnaround could be near at hand. The company, based in Murray Hill, N.J., said the pro forma loss for the quarter, excluding restructuring charges and other one-time costs, was 37 cents a share, compared to a gain of 16 cents in the year-ago period. However, results improved 5 percent from a pro forma first-quarter loss of 39 cents. The company said in January its financial results would improve each quarter through the year. Lucent's stock surged as much as 22 percent, and was still up 13.37 percent, or $1.23, at $10.43 in Tuesday afternoon trading on the New York Stock Exchange.
It ended the New York session at 6.4685 rand to the dollar, compared with 6.5315 rand late Tuesday. Steven Leach, chief economist for Citibank's foreign-exchange desk in New York, wasn't surprised by the rand's reversal. He said the South African currency, which is still down more than 5% against the dollar for the year, has been undervalued at recent levels. The dollar also slipped further against the Mexican peso, as the Mexican stock market surged more than 3.6%. Late yesterday, the dollar was buying 9.269 pesos, compared with 9.28 pesos late Tuesday.
This is only federal regulations, and obviously does not include the staggering number of regulations that were added in the wake of the 2008 financial crises which largely impact insurance and financial services, banking and energy. Studies estimate that the cost of compliance by businesses and the enforcement by the federal government has lowered GDP by 2% per year since 1949, and substantially decreased the median household income for Americans because of the economic burden placed on businesses (Perry, 2013). One example of relatively new, burdensome regulation is the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in 2010. The law was written in response to the world-wide financial crises of 2008 and the subsequent tax-payer bail out of banks that were considered “too big to fail”. It adds 2,319 pages to our growing federal regulation pile (Berson, 2010).
However, there has been talk that America may be close to another recession. A recession occurs when there are two consecutive quarters when the economy shrinks. The size of the economy is measured by gross domestic product, which is the value of all goods and services produced within the United States. (http://en.wikipedia.org/wiki/Early_2000s_recession)1 The quarterly Anderson Forecast by the University of California at Los Angeles predicts growth in the gross domestic product of just over 1 percent for the fourth quarter of 2007 and first quarter of 2008. Economic growth will remain "tepid" for the remainder of 2008 and return to 3 percent in 2009, said David Shulman, senior economist for the forecast.
Revenues last year tumbled 22%, to $1.6 billion, compared with a drop of only 2% for the overall corporate-applications-software industry. In the first quarter, Siebel's revenues dropped 30%, to $333 million. Siebel's stock price, at $8.50, is off a staggering 94% from its peak in 2000 of $119. It wasn't just the economy that hobbled Siebel Systems. A 2001 product upgrade was so difficult to install that customers were reluctant to buy it.
The IT bubble burst in 2000 caused a dramatic fall in IFDI which can be illustrated in Figure 1. The downfall resulted in the UK attracting only $16.8 billion in 2003. The data shows that the FDI inflows boosted in the period of 2004-2007, and that Mergers and Acquisitions that the Multinational Corporations used to enter the UK, as well as the reduced interest rate, can explain this. Due to the sudden collapse of the world’s economy in 2008 M&A became an unfavourable method of FDI and in just one year IFDI into UK shrank by 50%. The trend continued up to 2011, as the FDI pattern moved towards investments into third world countries and developing nations.
During 6 years of recession Croatia has already lost 12.3% of its output. Slowly progressing in structural reforms and Croatia’s dependence on the economy of the European Union the growth... ... middle of paper ... ...abour market, which decreased their chances of re-employment. Social policy regarding poverty is to aim at preventing short-term unemployment from becoming long-term unemployment. Unsurprisingly, deteriorating public finances resulted in annual deficits and a rise in public debt. Croatia’s general government deficit reached 5% of GDP in 2012, and the overall government debt was 55.5% of GDP.
During the same period, the Dow Jones Industrial Average has moved from 10,705 to 13,930—an increase of 30%, but the market is “wobbly.” • A tightening of credit has made it more difficult to get leveraged deals funded resulting in downward pressure on purchase price multiples and more restrictive funding terms and loan covenants. The Dollar and Economy: • The value of the dollar has lost value against the following currencies: Currency July 29, 2005 November 1, 2007 % Change (2) Canadian Dollar 1.2257 0.9497 -22.5 % Chinese Yuan 8.1056 7.4582 - 7.9 % Euro (1) 1.2129 1.4435 - 15.97 % (2) UK Pound Sterling (1) 1.