recession
DESCRIPTION
It contain causes and effects of recession.it also contain information about the great recession.TRANSCRIPT
By-Diksha Saxena
By – Diksha Saxena
What is RECESSION??In economics, the term recession describes the reduction of a country’s gross domestic product(GDP) for at least two quarters.
National Bureau of Economic Research(NBER) is the official agency in charge of declaring that the economy is in a state of recession.
The usual dictionary definition is “ a period of reduced economic activity”.
They define recession as:“significant decline in economic activity lasting more than a few months, which is normally visible in real GDP, real income, employment, industrial production and wholesale retail sales”
Causes of RECESSION
Currency crisisEnergy crisisUnder consumptionOver productionFiscal policy
SWOT Analysis
StrengthsRecruiting skilled employeeLow cost work forceMistakes or the wrong decision can be
analyzedEnough time to maintain work life balance
WeaknessHousehold income decreasesBusiness profit decreasesBuying capacity decreasesDemotivation in people arisesLiving standard of people decrease which tends to -Unhealthy living environment -Unhygienic and low grade edibles demand
increases
OpportunityIt can be divided into two categories : 1- Opportunities to publicGoods and services are available at lower
costSlash in the price of real estate Investment become easy
2- Opportunities to organization
Bureaucracy and politician becomes more co-operative
The efficient workers are able to survive in the organization, these in turn leads to increment quality goods and services
The remunerations , other expanses are decreased which in turn increases the saving
Policies become flexible
ThreatsHigh unemployment & job cutting rateBankruptcies & black money circulation
increasesInflation increases & GDP decreasesCrime graph increases & research rate decreasesProductivity decrease & dumping of product
increases
The Great Recession – 2008
The global contraction from December 2007 to June 2009 that resulted in the world economy shrinking for the first time since 1945.
The great recession was an ongoing market global economic decline that began in Dec.2007 and took a particularly sharp downward turn in Sept.2008.
Causes of The Great RecessionHousing marketRisk taking behaviorExcessive private debt levelsOil PricesGovernment policiesOver Production
Some major events of the Great Recession October 9, 2007 - The Dow Jones
Industrial average reaches an all-time high of 14,164.53 points.
December 1, 2007 - The recession officially begins. The unemployment rate stands at 5%.
February 13, 2008 - President George W. Bush signs the Economic Stimulus Act of 2008, which gives individuals a tax rebate and encourages business investment.
March 16, 2008 - Brokerage firm Bear Stearns collapses and is bought out by JPMorgan Chase.
September 15, 2008 - Lehman Brothers files the largest bankruptcy case in U.S. history.
October 6 - 10, 2008 - The US government unveils a massive rescue package for Citigroup.
December 9, 2008 - The government bails out General Motors and Chrysler, offering an initial $13.4 billion from the TARP fund.
January 16, 2009 - The government unveils a huge package for Bank of America, which includes $20 billion in bailout money and $100 billion in guarantees.
February 17, 2009 - President Obama signs into law a $787 billion stimulus package that includes tax cuts and money for infrastructure, schools, health care, and green energy.
March 9, 2009 - The dow hits the low point of the recession, closing at 6,547 - down nearly 54% from its October 2007 high.
June, 2009 - The recession officially ends after 18 months, making it the longest downturn in post war history.
October 2, 2009 - The unemployment rate peaks at 10%, hitting double digits for the first time in 26 years.
Impacts of The Great Recession
Credit crunchesReduction in savingsUnemploymentSales are not picking upSuddenly cash has evaporated from the marketProfitability is seriously hit
Effect of The Great Recession on India1.Investments in India in different types of policies of LIC and other insurance companies.
Source:- IRDA
2. Savings Rate in India
Source: Commerce Department, Bureau of Economic Analysis
3.Consumer Confidence Index
Source: Hindustan times
4.India’s unemployment rate
Source : Department of Labor
It is unhealthy for any nation to be in Recession. So, government will take certain countermeasures
to eliminate or reduce the effect of recession
Government has 2 plans
How to come out of recession?
Fiscal Policies(By Govt.)
Monetary Policies(By RBI)
Government influences the economy by changing howit (Government) spends and collects money
RBI manipulates the available supply of money in the country
1] Tax cuts for businesses or for individuals
More moneyavailable forspending
Demand picksup; Market can recover;
2] Automatic fiscal policy; Unemployment Insurance
Some income tounemployed people to spend
Fiscal Policies
1] Reduce reserve ratio
More moneyavailable for bankto give loans
Demand picksup; Market can recover;
3] Use its own reserved money to buy Govt. bonds
It becomes anincome to Govt.to inject moneyinto the market
MonetaryPolicies
2] Lower the interest rates
Individuals takemore loan
SuggestionsPromoting people to purchase and invest in the
marketMore Spending by Government to create new
jobs Limiting productionAttractive policies for the people having cash
reserveCut down in labor sizeCutting down loan interests and promoting themOrganizing investors summit Bringing old closed public mills to the functioning
ConclusionThere is a panic among investors & they are
rushing to get out of risky assets like stocks.As the outcome of all these development the
demand for gold has increased.As gold is seen as a safe haven, its price has
risen to record high.The industries are sensitive to high interest
rate.The RBI & our Government is prepared for
any repercussion in the financial market
RBI’s Power or Government’s Power is double-edged sword; Sometimes, their policies to recover from recession can be counter-productive and it may further worse in the situation.
Nation’s recession is controlled by the actions of everybody living in that country.