What Happens During a Recession?

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In this brilliant addition to my inspired train of thought on this issue, here are some things you typically will see during an economic recession such as we are currently facing. If you take the time to observe you will see these things currently happening in our economy.

Rise in the Unemployment Rate

During a recession, unemployment rates will rise. This results in a decrease of overall economic output. Since there are fewer people actively contributing to the economy, economic growth drops. Also, personal and company incomes will be stalled. The number of people looking for employment will greatly increase although the demand for new employees will be considerably lower.

Less Consumer Spending

When people are earning lower incomes, don’t have a job or are worried about their job they spend less money, particularly on optional consumer items. Likewise, this causes businesses to limit their spending. Furthermore, they’re more reluctant to pass along any increase in expenses. In order to move goods off the shelves, they will be much more likely to reduce prices if they are able to do so. If left unchecked this can causes deflation that can easily lead into a severe recession or even an economic depression.

Stock Market Plummets

Investors are generally conservative during recession. They will stick with sure thing stocks and bonds and sell off and avoid risky growth investments. As people lose their jobs because of the recession they will begin selling their investments in order to get the money they need to sustain themselves while they seek a new job. Both these sell offs cause the stock market to fall sharply.

Real Estate Plummet

During a recession, people become more fiscally conservative. This impacts the real estate market due to reduced demand for real estate products. People often delay buying and selling of property during recessionary periods. Also, due to job loss, there are more homeowners trying to sell their home at a loss in order to obtain some money or a degree of relief from a ruinous mortgage.

This entry was posted on Friday, November 24th, 2017 at 8:53 pm and is filed under Recession. You can follow any responses to this entry through the RSS 2.0 feed.

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