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 reason for this recent drop in consumer confidence is due to several key factors. One factor is the poor performance of the stock market. The Dow Jones is down from its peak that was hit last year, but has now rebounded slightly. The Nasdaq took a dive with the decrease in the prices of tech stocks. The Nasdaq has fallen nearly 56% from its peak in March of 2000.
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.
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.
Although the value of household’s financial assets have increased since 2009, the value of their real estate assets have not, which is furthermore decreasing consumer spending. • Growth in the UK and the Euro region has been weak and fiscal austerity measures to stop the growth of public debt have pushed the area back into recession, slowing growth further. The slow growth is this region in turn has slowed the rate of the U.S. recovery in 2012 and 2013, the UK and Euro region being a major U.S. export market. • Since 2010, fiscal policy has tightened considerably and federal government expenditures have contracted 2.8% in 2011 and 2.2% in 2012, which dampened further the economic growth. Moreover, the current budget debate shows further fiscal contractions in 2013.
Trillions of dollars along with federal surplus has been replaced with diffident debits. As stock markets decline, spending may also lesson. Business capital assets can aid the economy during recessions, though it grows at a slow pace. The country’s national return from economic decline will mirror that of Washington’s because the capital’s economy profited drastically more than most states from stock option revenue and the high technology industry, software and dot com bonds. Before September 11th, the majority of air travel companies were already experiencing monetary problems thus any financial assistance offered to them by the federal government would have been improbable in quickening the rebound.
Spain pulled out in 2011 34, the highest level since records. Latvia is the only country that exceeded Spain with 35.2. In the opposite side is Germany, with 29 and Norway with 22.5. The Spanish families have until mid-2012 a loss of wealth of 18.4 % over the previous year, representing the sharpest decline recorded between the economies of the euro zone, especially harmed by adverse economic conditions resulting from the crisis sovereign debt and the appreciation of the dollar against the euro, as reflected in a report on global wealth produced by Credit Suisse. In absolute terms, the aggregate amount of the impoverishment of... ... middle of paper ... ...jobs due to reduced capital inflow, as it is riskier to invest in Spain's market.
In addition, Kok (2011), in his study found that, in 2012, the US economy is still in weak growth even after two quantitative easing exercises amounting to USD 3 trillion. The 2008 global financial crisis is actually started from the plunge of US sub-prime mortgage industry and spread into the world financial and banking sector. Reavis (2012) in his study state that, the main contributor to the financial crisis was the heavily financial liberalization and prosperity that took place before the crisis and powerful banking oligarchy. This took uncalculated risk to gain huge profits which might threaten themselves and the mass majority. On the other hands, Koltz (2009) proposed that the financial crisis was happened due to the systematic crisis of a particular form of capitalism that namely as neoliberal capitalism.
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.
This solution imposed lowering debt by reducing spending and raising taxes. In 2009, US deficit was at an all time high, peaking almost $1.4 trillion. Since deficit reductions have not worked in the past, many individuals and politicians were skeptical with the DRP but Goldman Sachs, in an April 10 report, writes that in the first three months of 2013 the deficit was running at .4% lower from our $16 trillion from the previous years. Goldman says that by the end of this year our debt is projected to be lowered to $744 billion! This should be fantastic news but, according to a private-sector and government economists, “The nation’s unemployment rate would be nearly a point lower, roughly 6.5 percent, and economic growth would almost be two points higher this year if Washington had not cut spending and raised taxes.” Writers from Economic Times also say that the DRP will affect us negatively, bringing our deficit to almost $20 trillion by 2015.