The author of this article, Jeannine Aversa, is stating that key economic indicators point to the likelihood of a recession. Aversa supports her thoughts by noting the real GDP; “crawled at a 1.3 percent pace in the opening quarter of 2007…even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.” The author suggests the main cause of the economic slowdown is due to “the housing slump.” Consumer expenditures are driving the economy, but Aversa worries about a “fallout from risky mortgages and rising energy prices.” Uncertainty of the Feds actions concerning the interest rates is leading to lower investment spending. The author also states that the Feds decision on raising or lowering the interest is due to the
Known also as Black Tuesday, October 29th left stockholders shattered with recorded losses reaching $40 billion dollars (Kelly, n.d.). Many banks and financial institutions began collapsing which led to irretrievable, uninsured deposits and savings. Fearing further loss, people began spending less which led to a decrease in production and an increase in unemployment. As companies began to fail, the government devised the Smoot-Hawley Tariff in order to protect American businesses. The Tariff placed high taxes on imports leading to a decline in international trade.
Recent indicators display worsening conditions as mid January new unemployment claims have increased. The economy has continued to decline based on the unemployment rate, heavy equity losses in housing, and the continued difficulty in obtaining credit. Manufacturing output declines of the last few months of 2008 fell even more in January to the lowest since World War II. The exports had eased the demand decline domestically during mid 2008 but that market also experienced a decline by the end months. The reduction of energy prices mid 2008 is being credited for the overall inflation price slowing.
The second on is recession which is the economy slowing down, then the there one is slump this is when the economy hits rock bottom. Then the fourth one is recovery this is when the economy starts to expand again. Throughout the business cycle there are many alterations in the economic activities. There are years that we would see the economy at a strong point and there are years that the economy is slow and
The dramatic economic downturn in the world economy that hurt so many workers starting in 2008 only accelerated a decades-long trend toward more precarious jobs and the unstable hours, low wages, minimal benefits and insecurity that this work means for so many, as led decline in union membership and activities. First is the emergence of an increasingly competitive business environment, in which firms have
ACC/291 Week 1 Discussion Questions 1. How are bad debts accounted for under the direct write-off method? What are the disadvantages of this method? The direct write-off method is when a company determines that an account is uncollectible and it charges the loss to the Bad Debts Expense. An example of this would be when a customer is not able to pay their bill because due to a downturn in the economy, money may be tight if they have been laid off from their jobs or faced with unexpected hospital bills.
John majors government came into office after the downfall of Margret Thatcher, which ultimately created divisions within the party. Not only did the party suffer from the internal conflict but also faced the problems of the recession after the ‘Lawson boom’. In order to stabilise the economy he joined the ERM getting a good deal but ultimately resulting in ‘black Wednesday’ causing Major to raise interest rates to 15%. This was political suicide and he soon lost the support of the press we had once relied so much on to get re-elected in 1992. The housing market also plummeted leading to negative equity, which the majority of the working class could not afford resulting in the repossession of their houses combined with the drastic increase in unemployment Britain was in a mess.
Findings The business cycle is characterised by four main phases: Boom: This means when there are high levels of consumer spending, business confidence, profits and investment. Also Prices Unemployment tends to be low as growth in the economy creates new jobs. Recession: This means when there are falling levels of consumer spending and confidence meaning lower profits for businesses – which start to cut back on investment. Slump / depression: This means when there is a prolonged period of
Two Months after the crash , stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of the things they lost , by the end of 1930 it was too late and the Great Depression took
The Cause of the Great Depression The Great Depression is the most important economic event in American History. While it is widely believed that the crash of the stock market in October of 1929 was the cause of the Great Depression, there were many other factors and long-term causes that developed in the years prior to the depression. One factor that led to the Great Depression was the over-production of goods and supplies, While the average works wages remained the same, the prices of the goods being produced went up. Factories and farms continued to produce goods at the same rate while the demand for the goods was decreasing. As a result of the lower demand for goods, more and more workers became unemployed until about one quarter of