Recession: Impact on Day to Day Life[/b]
Whether you watch TV, read newspaper, magazines or even chat with your friends, the most heated topic of the discussion is recession. The impact of recession can be seen everywhere in our day to day life. Many a times we come across a conversation where some known person is just laid off from his job as an impact or the aftermath of recession.
Recession meaning a business cycle contraction. Technically speaking recession is that state of an economy or a country when its GDP (Gross Domestic Product) starts decreasing and continue to decrease for two quarters in a row. Recession or better figured as financial crisis is a currency crunch. It roughly started in US from the end of the year 2007 followed by other countries from the beginning of January 2008 when the stock prices tumbled down and the share markets were all time low throughout the world. The disturbed economy of US was majorly held responsible where banks were blamed to giving out housing loans unconditionally to people who were not able to repay it banks thus making the real estate sector to lose its value. It all started as a vicious cycle, where there was rise in inflation and the people were unemployed, the real estate value dropped down drastically which in turn affected the cash flow of banks. With no money with banks to lend it to emerging and established businesses; Businesses started to fall. This led to the fiscal deficit in most countries of the world which means the expenses paid by the government were more than the revenues it collected. Monetary policies of the world’s strongest countries collapsed. With no loans to compete the expenses the businesses started to fall further. Because of the failing of these business firms more and more employees were thrown out of their jobs. Few companies retained the employees but started cutting their salaries. The buying power of the consumer diminished.
The impact of recession could be seen on the day to day life of people. The negative effect was a seen in the educational field too, with the growing burden on the family’s available budget they were not able give their children educational environment, Entrepreneurships have been affected very drastically as the risk taking capabilities of the business and the individuals have decreased many folds. The loss in income has lead to low standards of living. The travel and tourism industry worldwide faced a natural set back; people were reluctant to spend on recreation and leisure as they were saving for the unforeseen. Due to recession the trade between various countries was hit badly. The import export industries incurred huge losses.
World’s major economies were badly affected following the currency crunch. US being the worst affected, which was followed by Japan. Even the 15 countries of European zone could not escape. This was the worst recession seen in 80 years. The recession marks on Ireland one of the most affected countries were very deep, the growth from where is very slow and challenging. "The global recession has left deep scars," said OECD (Organization for economic Co-operation and Development) secretary-general Angel Gurría of Ireland. Economy of China and worlds oil producing countries like UAE was also slowed down.
With such a negative growth where survival was the question; how would one even think of investments? In the period of recession where people were continuously losing jobs they would be reluctant in spending therefore there saving power rises. Despite of having more money at hand people lost trust in financial sector. Share markets were all time low, people started retracting the investment which they made prior to the set in of recession. People started withdrawing even from the government securities as the government themselves were facing economic instability. Mutual funds, stocks, bonds, treasury bills all suffered heavy loss. The effects were also seen in IPO’s. Small businesses were equally affected as they were not getting fund from the markets and banks. The consumer purchasing power kept on reducing. Banks were most badly hit by this recession. But quick measures like decreasing the interest rates on house loans, auto loans, educational loans etc. maintained some liquidity in the market.
Now two years after the set in of recession a small amount of economic activity can be seen. Since then many financial institutions and banks are coming up with various schemes to enhance people’s capital. Investing with gold is the only option which gave increased returns even in the worst of recession. With decreasing power of money correct and smart investment strategy has become the need of the hour. The bank fixed deposit is still considered as one of the best investment options although the growth in the capital is very low. Other investment options which give higher returns are Certificate of Deposit and Treasury Bills.
Aftermaths of recession on personal level can be both financial and emotional. With loss in income and growing competition to survive the psychological effect can be seen on individuals
In year 2010 now that the worst has passed people are talking about recovery and how to fight back the recession. Small entrepreneurs should be encouraged to take new business decisions so that the production will be enhanced. The banks should further cut the interest rates. Low interest rate will lure the consumer to buy and invest which in turn will create liquidity. New loan schemes should be developed for education, the interest rate on the educational loan should be lowered so that the scholars are not deprived of the education. Government should take measure and cut the income taxes so that people would have more money at their disposal. Government should take steps and initiatives to create employment for those who have lost their jobs. Most importantly to recover from a recession people will have to start thinking in a different perspective. Taking things in can do spirit will bring a new sunshine to this grim state of recession.
Whether you watch TV, read newspaper, magazines or even chat with your friends, the most heated topic of the discussion is recession. The impact of recession can be seen everywhere in our day to day life. Many a times we come across a conversation where some known person is just laid off from his job as an impact or the aftermath of recession.
Recession meaning a business cycle contraction. Technically speaking recession is that state of an economy or a country when its GDP (Gross Domestic Product) starts decreasing and continue to decrease for two quarters in a row. Recession or better figured as financial crisis is a currency crunch. It roughly started in US from the end of the year 2007 followed by other countries from the beginning of January 2008 when the stock prices tumbled down and the share markets were all time low throughout the world. The disturbed economy of US was majorly held responsible where banks were blamed to giving out housing loans unconditionally to people who were not able to repay it banks thus making the real estate sector to lose its value. It all started as a vicious cycle, where there was rise in inflation and the people were unemployed, the real estate value dropped down drastically which in turn affected the cash flow of banks. With no money with banks to lend it to emerging and established businesses; Businesses started to fall. This led to the fiscal deficit in most countries of the world which means the expenses paid by the government were more than the revenues it collected. Monetary policies of the world’s strongest countries collapsed. With no loans to compete the expenses the businesses started to fall further. Because of the failing of these business firms more and more employees were thrown out of their jobs. Few companies retained the employees but started cutting their salaries. The buying power of the consumer diminished.
The impact of recession could be seen on the day to day life of people. The negative effect was a seen in the educational field too, with the growing burden on the family’s available budget they were not able give their children educational environment, Entrepreneurships have been affected very drastically as the risk taking capabilities of the business and the individuals have decreased many folds. The loss in income has lead to low standards of living. The travel and tourism industry worldwide faced a natural set back; people were reluctant to spend on recreation and leisure as they were saving for the unforeseen. Due to recession the trade between various countries was hit badly. The import export industries incurred huge losses.
World’s major economies were badly affected following the currency crunch. US being the worst affected, which was followed by Japan. Even the 15 countries of European zone could not escape. This was the worst recession seen in 80 years. The recession marks on Ireland one of the most affected countries were very deep, the growth from where is very slow and challenging. "The global recession has left deep scars," said OECD (Organization for economic Co-operation and Development) secretary-general Angel Gurría of Ireland. Economy of China and worlds oil producing countries like UAE was also slowed down.
With such a negative growth where survival was the question; how would one even think of investments? In the period of recession where people were continuously losing jobs they would be reluctant in spending therefore there saving power rises. Despite of having more money at hand people lost trust in financial sector. Share markets were all time low, people started retracting the investment which they made prior to the set in of recession. People started withdrawing even from the government securities as the government themselves were facing economic instability. Mutual funds, stocks, bonds, treasury bills all suffered heavy loss. The effects were also seen in IPO’s. Small businesses were equally affected as they were not getting fund from the markets and banks. The consumer purchasing power kept on reducing. Banks were most badly hit by this recession. But quick measures like decreasing the interest rates on house loans, auto loans, educational loans etc. maintained some liquidity in the market.
Now two years after the set in of recession a small amount of economic activity can be seen. Since then many financial institutions and banks are coming up with various schemes to enhance people’s capital. Investing with gold is the only option which gave increased returns even in the worst of recession. With decreasing power of money correct and smart investment strategy has become the need of the hour. The bank fixed deposit is still considered as one of the best investment options although the growth in the capital is very low. Other investment options which give higher returns are Certificate of Deposit and Treasury Bills.
Aftermaths of recession on personal level can be both financial and emotional. With loss in income and growing competition to survive the psychological effect can be seen on individuals
In year 2010 now that the worst has passed people are talking about recovery and how to fight back the recession. Small entrepreneurs should be encouraged to take new business decisions so that the production will be enhanced. The banks should further cut the interest rates. Low interest rate will lure the consumer to buy and invest which in turn will create liquidity. New loan schemes should be developed for education, the interest rate on the educational loan should be lowered so that the scholars are not deprived of the education. Government should take measure and cut the income taxes so that people would have more money at their disposal. Government should take steps and initiatives to create employment for those who have lost their jobs. Most importantly to recover from a recession people will have to start thinking in a different perspective. Taking things in can do spirit will bring a new sunshine to this grim state of recession.