Economic Recession in the USA – The death of a leading economy
Generally Economic Recession, a recession is said to be a significant decline in the marketplace which is affected by fall in macro-economic factors like GDP, Household income and business profits while there’s an increase in bankruptcies and unemployment rate.
It’s acceptable to have a recession in some economies once in a while… but an economy like the USA???? Unacceptable isn’t it??? Well, somehow it has happened yet again!!!
The primary cause behind the current economic recession
Rumors are spreading all over the country as well as internationally, the primary reason for this economic recession like all other dilemmas that are happening all around the USA is the unsuitable ruling policy adopted by Donald Trump, The president of USA. He listens to no one except himself, neither to his wife nor even to his own shadow. Maybe he’s on the process of taking the USA from a democratic stage to an autocratic stage, we never know.
Donald Trump is a war person. He wants to quarrel with every other country that even his defense minister got fed up and handed over his resignation letter very recently. These war conflicts are the primary reason behind the economic recession that is happening again. These wars can lessen the confidence of consumers, and it also undermines companies to perform their trade in areas where there are military clashes which cause economic recessions.
Let’s compare the causes that led to “The great economic recession” with the current economic recession.
Bad effects of the recession
Unemployment means loss of jobs. This happens in an economic recession mainly because of the companies going bankrupt which means the employees will have to leave their job willingly or unwillingly due to the inability of the company to pay salaries and wages. Also, the companies which are surviving in the market are unwilling to recruit new employees as they are into cost-cutting. So mostly, the younger generation is affected by this.
- Rise in poverty
As people always lose their jobs and unable to afford much due to economic recession poverty is created in the economy
- Real income falls
Real income, in other words, the money which remains on the hands of people will reduce in an economic recession.
- Inequality increases
- Higher borrowing – Less tax revenue
- Losing outputs permanently
A recession leads to lower investment and therefore can damage the long-term productive capacity of the economy
Steps to be taken by individuals to prevent a recession
As the recession negatively impacts the society more and as the general public cannot control the decisions of the president and the government, there are some steps that people can take to prevent recession because prevention is always better than cure!!!
- Work hard and work more
Always remember the result of hard work is never bitter; It’s still sweet, and hard work never killed anybody but saved a lot of people.
- Pay your debts on time
Categorize your debts and always give priority to obligations that charge a higher interest or as we say to bad debts.
- Stuff your piggy bank with pennies
It’s better late than never. A penny saved is a penny earned. So cut down your luxury and save save save!!!
- Make sure to pay your taxes.
- Buy more and more assets.
These steps may not completely eradicate recession, but these small steps taken can prevent a recession from occurring. However, the government should also be responsible for avoiding the economic downturn. Efforts from the public will be wasted if the government doesn’t participate in the process of eradicating economic recession because no one can clap using a single hand.
Steps to be taken by the government to prevent a recession
- Bring down inflation
Everything that goes up has to come down, even the spiraling prices. The more the time the prices stay above the purchasing power of an average citizen, the more the damage. Hence take any measure deemed necessary to bring the inflation rates down
- Encourage Imports of High-Priced Commodities
- Reduce Government Expenditure and Focus on Infrastructure Development
The government should be a role model for people to show the cutting down of unnecessary expenses.
- Encourage exports
To keep the foreign currency reserves, a healthier government need to encourage exports to the limit that it doesn’t create an inflationary situation in the country. This should transfer the country from a consumer state to a producer state.
- Ensure a peaceful atmosphere
From the beginning of the article, the more focus was given in reducing war and encouraging peace as this is the root cause for the current economic recession. Investors are happy to invest in a country where military conflicts are of the minimum rate; otherwise, they will migrate to countries which are of a peaceful state. Hence peace should be promoted
The economic recession in the USA happening again is yet another mirror era like 2007-2009. The troubles that occurred in that period should not be brought back up again. Instead, government, Businesses as well as people should understand the root causes for this recession and take necessary steps to prevent depression from hitting the USA again.