Effects of Economic Recession on American Jobs

6

1500

This was the most severe form of economic recession that US had experienced in decades. A vast majority of industries in US were affected by this economic recession. US could not find any way to escape the economic recession when the whole world had actually completely soaked in it. The circumstances took a fortunate turn in the last three months of 2009, and the economy began to grow and become strong, though the graph soon took a downward turn specifically in the later half of 2010 when the growth of GDP in US fell to 2 per cent. “The federal stimulus money that has added at least 1% but likely 2% or more to the GDP growth will be winding down and that could put at least as much of a drag on the economy as the boost it gave” (Hall). When the recession was at its apogee, the years were full of pain for a lot of Americans because they had lost jobs. According to an estimate, as many as three quarters of a million jobs were being lost on a monthly basis in US in the years of recession (Bureau of Labor Statistics”). The rate of unemployment in US reached 10.2 per cent by October, 2009. Since then, it has shown a slight decline and has reached 10 per cent. Before stabilizing, the unemployment rate in US is expected to go up till the end of 2011. A loop of negative feedback was introduced by the economic recession which is expected to keep dragging the US economy for a while in the near future despite the fact that the economic recession has largely declined. Some of the components of this loop are high rate of unemployment, inability of the unemployed to pay their mortgages and bills, and weakened wealth from loss of equity. People in US are suffering from lack of income. Their lowered financial status is causing them to save more and spend less. Owing to the tightness of the credit, people in US are finding it hard to purchase homes or establish new businesses. As a result of the declined consumer spending, businesses have lowered their production in an attempt to improve their efficiency. A lot of companies in US have downsized in the past two to three years and the rate of recruitment has declined accordingly. US government has shown a similar trend. The value of property has steadily gone down along with the property tax revenues. Accordingly, the sales have been lowered together with the sales tax revenues. Owing to the lowered incomes, and a lot of losses, income taxes have been lowered. On the other hand, US government is spending much more than ever before in order to cater for the needs of the unemployed. This has caused the US government to increase the payable fees as well as cut back services. As a result of this, governmental contracts and government employees have reduced in number. The Federal governments have plunged into the scenario in a very aggressive manner with a view to distorting the loop of negative feedback. The Federal governments aimed at minimizing the downfall of the global economy so that the loop of negative feedback would be reversed. However, as a consequence of the massive spending and increased involvement in economy, the US government now feels the need to retract itself so that the debt that has thus been incurred could be paid back. This can be easily achieved by if the US economy continues to grow like it did grow by 5 to 8 per cent after the end of economic recession. However, it is important to realize that the recovery of economy is not occurring in a

You Might Also Like