A country’s economy is a cycle. Sometimes it’s at the top and sometimes it’s below. Being at the lower part of the cycle is what you may have heard and read over and over again in televisions and newspapers as economic recession.
An economic recession is characterized by weakening business environment where there is low demand and in turn lower production. Most of the time, this results to a high inflation rate, which in lay man’s term is the lowering of the value of one’s money. This happens because of the rising costs of food and other retail items in the country. The same number of items that you can buy with for instance a hundred dollars will not be the same as number of items that you used that with years ago.
An economic recession, when it charges forth without any intervention can wreak havoc in a country’s overall economic health. It can lead to the loss of jobs, closure of businesses and rising costs of living. This is what the United States is currently feeling right now. 2008 has not been a good year for the country with large losses in its real estate industry as well as in other business sectors. Many lost their jobs and had their homes foreclosed because of non-payment of monthly fees. The country is also feeling the burden of skyrocketing oil prices as well as food and living costs.
With the United States as one of the main driving forces of global economy, their slowdown is felt all over the world. Countries which they have business interests have also suffered economic slow downs. The dollar which is being used in transactions all over the world is also weakening, affecting people who have either invested in the American currency or those who use it for their business. Often, in this scenario, those who are in the export business are affected by this as they are given dollars as payment for the products that they manufacture.
But don’t get worried. Although the economic recession may seem hard to deal with, it is not impossible to do. In fact when you really think about it, the whole family can actually do their part in saving during these economic recession times. Here are some ways:
1. Involve the whole family
You are not only one who should be saving during these hard times. Doing this should actually be something that the whole family should be doing. This way, you can be sure that everyone is pulling their weight. Saving as a family will also help keep the family closer in this hard times.
2. Explain the situation
You may not realize it but young children are actually smarter than they let on. When they are given a clear explanation, they will understand the situation and will even act on their own volition. You don’t have to constantly remind them or order them about. Explaining the situation will also allow your kids to feel that they are needed and that they can do something significant for the family. As young as they are, they also like to feel that they are needed.
3. Be a role model
Asking your children and other family members to save up when you are not is a bad way to encourage them. Make sure that you serve as a good role model to them by doing your part and making sure that they see you doing your part in this economic recession.
Filed under Recession by on Jan 6th, 2009. Comment. 
What is an economic recession? This occurs when there is a significant decline in the economy which usually lasts for months. This is visible in terms of consumer spending, employment, industrial production, real income and wholesale trade. A technical indicator of this is 2 consecutive quarters of negative growth which is measured by the country’s GDP or gross domestic product.
Experts say that an economic recession is normal because it is part of the business cycle and things usually improve within 16 to 18 months.
During the business cycle, there is a period of recovery, expansion, slowdown and then recession. During recovery, the GDP of a country starts to move up. When the GDP grows robustly, this is the time that it expands. When consumers are not buying that much, this is when you have a slowdown. Because there is weaker demand, you have a recession.
The last economic recession occurred in 2000 and 2001 which featured three quarters of negative growth followed by three positive quarters then five more quarters of sub par growth. Experts say that the same trend will happen right now.
One solution that the government usually does is lower interest rates to help stimulate the economy. Just last year, the Federal government slashed interest rates three times towards the end of the third and fourth quarter year so that overnight loans between banks could be borrowed at 4.25% which happens to be its lowest in the past 2 years.
What makes the economic recession different from what occurred after the Second World War is that this one is caused by falling home values and a crisis of confidence among fixed income investors.
Despite the fact that the country has endured this time and again for over 50 years, there is still no way to predict when it will happen.
Some use the stock market as an indicator. Others use the inverted yield curve which uses yields on a 10 year and three month Treasury securities and the Fed’s overnight fund’s rate. The unemployment rate is also another which happens to be one of the things that make up the index of leading indicators.
There are people in the Bush administration who do want to call it an economic recession because this will make people panic but there are others who are brave enough to admit that it is here. Since it is going to be some time before the economy recovers again, everyone is advised to stay calm, save up and look for long term investments worth going into.
Apart from the war in Iraq, the economy is going to be one of the critical issues that both candidates have to address as they are campaigning for the highest post in the land. Whoever wins, they have to find a way to reduce the unemployment rate, help people save their homes and a lot of other things that affect the average American household.
An economic recession lasts months at a time. If it should continue for a much longer period, then this is called a depression which is something that the world and not only the US experienced at the end of the First World War. This lasted for up to 4 years that many hope will never happen again.
Filed under Recession by on Dec 27th, 2008. Comment.
