Recession or crisis affect economy growth for United State in 2008
Economic growth is an increase in the ability of the economy to production and consumption of goods and services. It generally by adjustment in terms of gross domestic product (GDP) or gross national product (GNP). The effort of rapid economic growth is one of the important differentiate characteristic of a successful economy. The economic growth is calculated by the percentages change in the real GDP. The fact for the U.S economy grew rapidly than Europe during the year between 1850 and 1950.
In economy, recession is sense decline or general slowdown in activity across the economic. When recession occur in a country will lead a fall in two consecutive quarters like U.S occur recession or crisis in December 2007 until June 2009. It lasting for 18 month. The time is worst recession called great recession for U.S people. Recession happen in economic growth will cause grow domestic product (GDP), investment spending, household income and inflation will fall but the unemployment rate and bankrupt rate will increase. In
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Increasing in national debts means that government will spent less money to developing the country. In 2008, U.S occur crisis in economy and decided to provide liquidity to markets so U.S purchase around $12 billion of short-term institution debts. The meaning of Credit crunch is reducing the confidence to lenders lend funds to borrowers because they scare that borrowers will bankrupt. Recession occur increase credit crunch cause massive in credit crunch leads negative in economic growth. The fact in U.S, banks don’t want to mortgage the loans so they become timid to lend each other. This cause a lot of bank bankrupt like IndyMac Back, AIG and others. Due to bank bankrupt the employment rate in 2008 decreases rapidly and effected economic growth