subject: Things You Should Know About Market Recession [print this page] There are a lot of complicated matters that would result to market recession. In technical terms, market recession means a decline of a nation's Gross Domestic Product or GDP for two consecutive quarters. This mean that the production decreases as measured by Gross Domestic Product (GDP), employment, capacity utilization, investment spending, household incomes, business profits and inflation as bankruptcy and unemployment increase.
For better understanding, let's state one good example. The supply of goods normally is bigger than the demand of the consumers that will lead the companies to sell their goods at higher price. This will lessen the consumer's confidence as he or she will lose interest in purchasing the goods in order to decrease his or her spending. Such economic decline could have then a large effect on the nation's economy. This situation will then harm specific industries and will eventually lead to market recession like what happened to banks and credit and mortgage industries.
With regards to this, one basic reason for market recession would also be overspending of the consumer. Spending too much than the actual amount you earn would lead to debt. The GDP declines with the increasing amount of debt. Economic experts are advising everybody from the start to learn how to save and be more cognizant with their spending. Government is trying to solve this kind of situation by creating policies. However, failure of these policies could result to unfavorable results to a nation's economy such as increasing inflation rates that decreases the purchasing power of the consumer. These will slowdown economic growth too.
In addition, the main concern of every government should be increasing the ability of a nation to attract foreign investments as it increases the economic confidence of such nation. Considering the increasing oil price, this will in turn increase other prices of goods and services while the consumers' confidence decrease and eventually undermine the business. Both of these will have a domino effect on inflation as it goes up. Another domino effect will be the increase on the rates of bankruptcy and unemployment rates. One country suffering from market recession will affect the global economy as these are all a chain of reaction.
We can no longer prevent market recession. It will always be a part of the nation's economy. How we handle the situation will depend on how much we know about it especially the problem. Let us not dwell on the problem anymore, let us focus on finding solutions. Knowledge is indeed a power.
