It is a part of the business cycle after boom (when the sales of goods and demand can grow which can lead to increasing of the prices and an expand of the company). The recession affected all sectors from finance sector, which is one of the most important in the UK to retail where rising the unemployment and bancruptcy. The UK has experienced the longest period of economic growth since 1992, despite the economic wealth, the country faced the deepest and the longest recession since The Second World war, which began in 2008, when the gross domestic product has fallen by 1.5% in the last quarter of the year after a 0.6% drop in the previous quarter together with living standards and the consumer confidence. This happened mainly because of the rise in interest rates which caused the fall in house prices by 20% year-by-year, because people could not afford to pay mortgages, fall in manufacturing sector mainly because of competitors from abroad e.g. Asia, low savings rates and a slump in people’s income. Slump is ‘‘ A slang term denoting a period of poor performance or inactivity in an economy, market or industry. In economic terms, a slump specifically refers to a recession, signaling a slow down of business activity.‘‘ [http://www.investopedia.com/terms/s/slump.asp] Many businesses had struggled to survive during the recession because as people did not spend enough money during this time, businesses were loosing their profits what leads to losses so they needed to reduce their costs, made a special offers and decrease the prices to attract more customers and earn as much Money as possible to pay their bills and employees e.g. Mark & Spencers had to decrease their prices in fashion and food because of the cheaper competitors. But... ... middle of paper ... ...ive because has innovated their products and expanded the shares. All these businesses reached the recovery, they are investing into fixed assets (machinery, property), increasing their profits and filling up the gaps in existing space capacities to make some more money. However, this can lead to shortage for labour with particular skills as well as increasing costs. If the business want to survive in the future recession they should work out and eliminate all their debts, make regular financial reports, reduce their costs of materials and the cost of labour by training their staff, improve the quality of the products and services, pay attention on new and existing customers, bring new different products at top quality, manage their businesses as effective as possible by analizyng financial reports and productivity and increase the advertising budget.
...ults of the recession. In order for this never to happen again, there is a need to learn from the mistakes in the past and to look for the warning signs. The problem is not just restricted to one country, but is a global problem and needs to be addressed as such.
The July 1990- march 1991 recession lasted eight months and was caused by many different adverse financial problems on the environment in the early 90’s. Most post was recessions are short as this one was. They tended to last only up to eleven months at a time. On October of 1987 Black Monday occurred which caused the stock market to crash. The Persian war joined with the rising infiltration rates created this recession. When the recession began the Fed began to try to reduce infiltration, which then limited economic expansion.(Kevin Mulligan Recessions) Extreme changes in the GDP growth began to emerge at the beginning of 1990’s, however the overall growth seemed to remain positive. As a result of this recession a loss of consumer and business confidence was lost due to rising of oil prices along with an already weak economy.
ii. The economy is said to be experiencing recession when demands for certain products and services shrink. When demand falls, the prices will also decrease. When this happens, companies will not be able to make a lot of profit. To survive in the industry, they needed to cut some of their staffs. During this period of time, the rate of unemployment is rising. When they do not have enough workers, the productions are not as numerous as during the ‘booming’ state. Because of the...
The United States has been through many recessions in its history, but I have chosen to focus on the recession of 2001. This recession only lasted from the months of March through November of 2001, but many things happened to our economy during these eight months of hardships, including one of the most traumatizing events in the United States of America’s history. “A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail trade. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.” (NBER) Not only did the United States experience a recession, but it was also the year our country went under an attack brought onto the World Trade Center, and this shook our nation up even more than an average event might. March 2001 ended a ten year expansion, and led to an eight month downfall of our economy, also known as the 2001 recession.
New businesses will take longer to thrive with the United States falling economy. The faltering job market and the deepening slump in housing threaten to hurt consumer spending. Consumers are becoming more conscious of their spending and therefore using cash to pay for smaller necessary purchases. The cost of entertainment and other presumed luxuries may be pushed to the background by most families, when having to choose whether to pay for a bill or treat the family out. Thriving businesses will understand the need to provide a service or product at affordable prices.
...he global economy and its people. Rapid profit maximization and expansion has a great risk when trying to make a company as competitive as it can be. If done correctly a company can be reward nicely for the risk, however in this case, companies such as Citigroup and Netbank failed to see how much growth was occurring and started to run a deficit. This deficit eventually led to the downfall and bankruptcy of many companies. This however can translate into a learning experience for those companies who did survive the recession. Companies now should now have somewhat of an idea on how to prevent such occurrence again. With learning comes experience, experience in such an experience will help guide a company during the tough times. Thus, though the times were bad during the recession, the knowledge gained from the recession should be remembered and applied when needed.
It has been 5 years now, but the world economy is still hovering over with ill effects of global economic recession. Different economist define recession in a different way but one common definition which can be derived is that recession is long lasting and prime reason for slowdown to economic activity(GDP). In terms of measuring the effects of recession, the broadest indicator of economic activity is real gross domestic product(GDP). Our following section will discuss how the economic activities in US has actually decreased since the beginning of market turmoil.
When economy grows, people have more money to dominate. So customers are more likely to purchase clothing, which increases company’s sales. On the other hand, when economic meets with recession, people have less disposal money. For example, during the financial crisis in 2008, a lot of people went through unemployment, so they tend to buy cheap clothing or avoid shopping, which reduces fashion companies’ sales. As a consequence, retailers may cut down the selling price to get rid of large amount of stuck inventory and to survive within other
In economics, a recession occurs when there is a slowdown in the spending of goods and services in the market. A recession causes a drop in employment, GDP growth, investment, as well as societal well-being. All recessions are caused by a specific cause, but the Great Recession of 2007-2009 was caused by a crash in the housing market. This crash was triggered by a steep decline in housing prices. All of a sudden, people bought houses because there was an excessive amount of money in the economy and they thought the price of houses would only increase. (Amadeo, 2012). There was a financial frenzy as the growing desire for homes expanded. People held a lot of faith in the economy and began spending irrationally on houses that they couldn’t afford. This led to overvalued estate and unsustainable mortgage debt. (McConnell, Brue, Flynn, 2012).
Global recessions of 1975, 1982, 1991 and 2009 have questioned economists of the specific era to provide the causes of these recessions along with steps to avoid them. IMF considers global recession as “A decline in annual per capita real World GDP (purchasing power parity weighted), backed up by a decline or worsening for one or more of the seven other global macroeconomic indicators: Industrial production, trade, capital flows, oil consumption, unemployment rate, per capita investment, and per capita consumption” (World Economic and Financial Surveys). A recession therefore affects all the countries dependent on an economy undergoing recession. Since decades economists are trying to draft possible measures that an economy can take to avoid recession or to get out of a recession. Constant debates, on which approach an economy should take to get out of recession, have never reached to any conclusion. Mainly there are three schools of thought in economics that emerged during and after recession i.e. classical, monetarist and Keynesian. No school of thought has yet provided a perfect solution as the approaches by these three schools have many pros and cons. However, many economists believe that Keynesian is a more suitable approach for getting an economy out of recession. Although Keynesian approach have policy lags and can cause high inflation, however, Keynesian tools’ expansionary fiscal policy, expansionary monetary policy and revaluation of currency are very effective in increasing GDP ultimately pulling an economy out of recession.
The main thrust of this article is that underlying causes of the Great Recession, were not solved. The corruption that led to the excesses still remain, the Republican congress has stifled the recovery process with horrible austerity measures that hurt economic growth. Unemployment has dropped to normal levels, but it took the full eight years of the Obama administration to do so and worse, yet the halfhearted reform measures mean that companies are still engaging in the same practices
Business cycles are defined in the Webster dictionary as “economy-wide fluctuations in production, trade and economic activity in general over several months or years in an economy organized on free-enterprise principles”. These cycles have three main characteristics; expansion, recession, and depression. Expansion is known as increases in the demand for capital and consumer goods. Recession is known as the time when an economy slows down, and the level of sales and production start declining. Depression is know as the Demand for products and services decrease, forcing companies to shut down some production facilities, a period of recession ushers in depression.
Due to the stock market crash some banks were forced to close their doors without warning and without letting people withdraw their money. When the doors closed the money people had deposited was lost resulting in the loss of trust the public had with banks so they were no longer depositing money which meant that the banks did not have much money to lend out or invest. This resulted in the closure of even more banks because they did not have any more funds. The public not only stopped storing their money in banks but also stopped spending and started saving their money instead because they were unsure of the future that lied ahead of them. They stopped buying manufactured products which resulted in the loss of profits from those companies and eventually forced them to stop production and close down and many workers lost their jobs increasing the unemployment rate. This was the beginning of a cycle where less public spending meant less company revenue, which also resulted in the loss of jobs for the current employees of those companies resulting in a high rate of unemployment, and without steady jobs spending was then again affected because of lower family
There are many responses that a company can have to troubling economic times. They can first weather the storm and survive. They can back up and get driven out of business, or they can grow. The economy has been in recession for many months. It is the job of our company to identify things that can help businesses to make it through these times and hopefully prosper.
Many countries in the world have been suffering a recession in their economies and UK has not been an exception. A recession is a macroeconomic term describing one of the two business cycles that economies go through. The business cycles is characterized by either a boom where there are more business activities carried with a rapid economic growth and points of recession where there is retardation min economic growth. Various aspects and factors contribute to economic growth, which is measured through GDP. This factor may include savings, investments government spending plus other factors within either an increase or a decrease. Reduction in spending may lead to a recession while a n increase in spending may lead to expansion that is a boom in the economy.