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Recession In The United States

2035 Words9 Pages

0.0 Introduction
The US economy, a $15 trillion giant, which makes up 25% of the world economy, is in trouble, and could drag down world growth. The US central bank has cut interest rates aggressively and the US Congress is planning an economic stimulus package to prevent a recession.

1.0 The definition of “recession” and the technical definition of “recession”.
1.1 Definition of “recession”
Recession refers to the economic stagnation or negative growth period. That means significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade (purchasing power).

1.2 Technical definition of “recession”
Technical recession refer in …show more content…

Its overall effect is the drop in the GDP of a particular nation. Gross Domestic Product (GDP) is considered by most economists as a serious indicator of strong economic indicator, so when GDP decreases or fallen for two or more consecutive quarters (Technical indicator the recession), then its sign of weaker economy. There are a few indications that can be used to foretell the beginning of the recession. 3.1 High of Unemployment Rate
During recession, employment is likely to go down due to some factors. Some of them include:
• Less activity, especially in trade due to less exchange of goods and services between individual. Manufacturing, processing and other general industrial activities are usually slowed down, so employment is adversely affected (Drechsel & Scheufele 2010).
• The inability of a firm to pay all its employees due to low profits, hence layoff of some individuals are possible.
3.2 Industrial Production
Industrial production is likely to go down due to less supply of raw materials to the industries, due to economic constraints such as a rise in the cost of fuels. Besides, demand on the side of the companies might become less due to less circulation of funds or ability to acquire them (Shiskin, …show more content…

An essential element of this policy is the adjustment of real wages based on productivity, and thus, so that domestic consumption can grow with the growth of demand. It also helps to prevent unit cost labor. And the increase in the cost of power has brought major domestic root causes of inflation under control.
4.3 Monetary Policy
Monetary Policy can reduce the focus on price stability and focus more on the actual life Production capacity investment provides low-cost financial protection, which in turn creates new jobs as an opportunity (Rogoff and Reinhart, 2009). The rate of wage growth is in line with the rate of productivity growth driven by the target inflation rate accordingly, is the best way to control inflation expectations.The available evidence suggests that monetary policy on financial turmoil the reaction is non-linear. When the financial system is stable, policy development, targeting inflation and output, mainly reflects macro view the economic situation. However, the central bank may adjust its monetary policy to resolve the financial turmoil in

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