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Essay on the effect of economic recession
Essay on the effect of economic recession
Impacts of the Great Recession on the current economy
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Economists are saying that the recession is officially over and that the United States is starting to recover. However, Americans are still feeling some of its effects. When their savings and pensions have disappeared, there is nothing else for these people to look forward to except to look for work and save up some more.
Some Americans have loans to pay and retirement is far off from their list. SCPR has it that the recession has also impacted millennials. These millennials are now forced to manage their financials.
Take for instance one millennial, named Austin Prater. He saw how his parents went through the recession and how it changed the way he thinks about money and finance. He took out life insurance families for himself so his family
We are all putting money into a pot, and some of us aren’t using the money or the resources that we end up helping out. There are a lot of programs that are out there to help support lower waged workers or people that can’t find jobs. Some of these programs are food stamps, medicare, and lower income housing. Everyone helps pay for these things, but there are only a certain amount of people that can use them. If you make a certain amount of money and it is too high, then you don’t qualify for them, even though maybe it isn’t high enough to live comfortably. Retirement may not come as easy for the younger generation because of the fact that people are using the social security, and we may not have the amount that we need when we retire. How our society is set up, you almost get more taken away the harder you work, and for the ones that don’t make as much, get all of the
These conditions have the ability to cause recession. Now that an armistice has been reached in Korea, a recession is beginning to occur (Pach and Richardson, 54). I believe that the President’s chief concern should not be to make an immediate and fast acting restoration of the general economy. The problems of the federal deficit and the recession must wait until the more important problems are dealt with. The problem at hand is the rising rate of unemployment.
Throughout all of my research over the recession of July 1990-March 1991 I have concluded that it was not one of the largest recessions the United States has ever seen, but it was also not the smallest. This recession was only eight months long and did some damage, but not a lot. The Gulf War had the biggest impact on this recession along with the oil spill causing a rise of oil prices. The economy hit a low point and was not able to come out of it until the following year after the recession had already technically ended. Unemployment rates were at a low point towards the ending of the recession and because companies were hesitant about hiring new employees’ unemployment did not start getting better until the following year after the recession ended.
Many people today would consider the 2008, United States financial crisis a simple “malfunction” or “mistake”, but it was nothing close to that. Contrary to what many believe, renowned economists and financial advisors regarded the financial crisis of 2007 and 2008 to be the most devastating crisis since the Great Depression of the 1930’s. To make matters worse, the decline in the economy expanded nationwide, resulting in the recession of 2007 to 2009 (Brue). David Einhorn, CEO of GreenHorn Capital, even goes as far as to say "What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual. In my view, the crisis wasn't an accident. We didn't get unlucky. The crisis came because there have been a lot of bad practices and a lot of bad ideas". The 2007 financial crisis was composed of the fall of many major financial institutions, an unknown increase in mortgage loan defaults, and the derived freezing up of credit availability (Brue). It was the result from risky mortgage loans and falling estate values (Brue) . Additionally, the financial crisis of 2007 was the result of underestimation of risk by faulty insurance securities made to protect holders of mortgage-back securities from risk of default and holders of mortgage-backed securities (Brue). Even to present day, America stills suffers from the aftermaths of the financial crisis.
Since being founded, America became a capitalist society. Being a capitalist society obtains luxurious benefits and rather harsh consequences if gone bad. In a capitalist society people must buy products and spend money to keep the economy balanced, but once those people stop spending money, the economy goes off balance and the nation enters a recession. Once a recession drastically takes a downturn, the nation enters what is known as a depression. In 2008 America entered a recession and its consequences were severe enough for some people, such as President Barack Obama, to compare the recent crisis to the world’s darkest economic depression in history, the Great Depression. Although the Great Depression and the Great Recession of 2008 hold similarities and differences between the stock market and government spending, political issues, lifestyle changes, and wealth distribution, the Great Depression proved far more detrimental consequences than the Recession.
It is to my belief that no one can possibly predict the future of the economy. Because of this we are faced with many questions that cannot be easily answered. Will the economy recover drastically or simply continue to increase moderately? Or could the economy in turn go into a recession? “There's been plenty of good news about the U.S. economy… employment is expanding (2.4 million new payroll jobs in the last year); inflation remains low (less than a 2 percent rate in the past quarter); the stock market is higher (up 11 percent on the Dow from its November low), and business investment is impressive (rising at a 14 percent rate in late 2004).” (1) It is my opinion that unless something drastic happens in the world today, positive or negative, the economy will continue to increase at a modest rate. Even though no one quite knows which way our economy is heading, there are many economic concepts designed to help measure positive and negative changes that can show us how well we are or are not doing. These concepts include examples such as gross domestic product (GDP), business cycle, and unemployment rate.
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
Looking back to the Carter and Reagan Administration’s, you can begin to see where the Recession originated from. Prior to the Reagan administration, the United States economy experienced a decade of rising unemployment and inflation. Political pressure favored stimulus resulting in an expansion of the money supply. Reagan wanted to increase defense spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates in combination with simplified income tax codes and continued deregulation. During Reagan's presidency the annual deficits averaged 4.2% of GDP after inheriting an annual deficit of 2.7% of GDP in 1980 under President Carter. The real
middle of paper ... ... It is evident that although we may be entering into a recession on different terms than the one before, the United States is still in danger of once again becoming a victim of another Great Depression. The Great Depression is a time in the history of the United States that people have learned and gained knowledge from. Its harsh times and conflicts have been written about in books, seen in movies, talked about on radios, and told to families throughout the generations.
The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the rate of inflation. Paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay.
Nearly 3.7 million American babies born in 1982 were the first members of the new Generation Y, or more affectionately known as millenials (Thompson, par. 1). Many things play into whether a generation is considered to be faring ‘better’ than another one; job opportunities, the state of the environment, whether the U.S. is at peace or at war, income vs. living expenses, the general happiness of the people, and the list goes on. Millenials are part of a special generation because for decades, “The American Dream” has included the belief that the future generation will fare better than the present one; however, millenials are not projected to fare better than the present generation X for many reasons.
When the Baby Boomer generation was questioned about the newer generation, these words and phrases was often used: “slacker”, “lazy”, “has it easy”, “entitled”, “obsessed with their phones/internet/games” and “antisocial”. On the other hand, Millennials (or Generation Y) would say this about their older counterpart: “entitled”, “ruined it for those who followed”, “had it easier”, “narcissists”, “stubborn”, and “materialistic”. The reason for why the elders would see it that way is because they had to live without the quick solutions that teens have nowadays. This “elders bashing on the newer generation” isn’t uncommon, as seen by what was recovered from Aristotle’s and Plato’s time (Rampell 389). For Millennials, some of their tension comes from the fact that they will be the first generation earning less than previous generation for the same amount of work (Roos). Not only that, but the prices for land property, and college education, which is needed in many jobs nowadays, has skyrocketed compared to their parent’s and grandparent’s. Due to this wealth gap, it sparked a lot of tension between the generations, and this can be seen in smaller environments, such as in the
Fourteen to fifteen percent more millennials are worried about sudden income loss than boomers. With that being said, millennials are less likely to take risks when investing. Young workers today want offers that provide the most stable situation to help them prepare for the future. Millennials also invest more into their retirement fund and save more vigorously, opposed to bloomers, who are close to retiring. This new trend among the millennials could be due to a law being passed in 2006, allowing 401(k) auto enrollment for employees by their employers. The auto enrollment is not all to blame, since many employees do not realize they have an opt-out option when it comes to their
The new generations do not want to always have a little family or a job. They want to live life their way with their own rules. The less experienced generations will sometimes rise above the older wiser ones. Also, many
The Millennial Generation is a generation founded on the backs of the Baby Boomers. Born 1980- 2000, the Millennial Generation is the largest in history. The 80 million millennials make up 25% of the United States’ population (Barkley). They have seen the rise of the Internet, the iPhone and Social Media. The Millennial generation is also the most recent Civic Generation. The last Civic Generation was the founding fathers born 1742-1766. Civic Generations are known for being an “institution building” generation and for setting agendas for their countries. Civic Generations tend to be very revolution oriented, while their parents reflect a more conservative Generation.