Economics Crisis: Economy In Recession. How Can It Effect You?

How Can An Economic Crisis Effect You?

An economic crisis will touch the lives of many.
Some will however hardly notice the negative effects of an economic crisis.
And some may even benefit from one.

There are many ways an economic crisis can affect someone. To name but a few:

  • You can lose your job.
  • You can hold a job but under worse pay and other conditions
  • Your assets may dwindle
  • Your buying power may decrease under inflation
  • Social security safety nets may be demolished
  • You might become depressed

The impact of the recession on mental health can be explained not only by the rising unemployment but also because many workers are afraid, they may lose their jobs.

Economics Crisis: Economy In Recession. How Can It Effect You?
Economics Crisis: Economy In Recession. How Can It Effect You?

What is Economy?

The term economy refers to a fulfilled, accomplished or carried out social system of production, exchange, distribution and consumption of goods and services of the locality, city or the nation and some other area.

A given economy is the outcome of a procedure or method that includes its technological evolution, civilizations history, and social organization as well as its geography, natural resource endowment and ecology surrounded by some other factors.

An economy doest not have a precise dimension, it can mean the economy of the entire city, (Local Economy) of the whole nation (National Economy) and the whole world (International Economy) given that it implies the production or development of goods and services.

The Social Sciences including Economics, Economic History and Geography are the series of fields of studies illustrating, describing, exploring and featuring the economy at the present.

There are also practical fields of studies directly related to human actions including production, distribution, exchange and consumption of goods and services ranging from engineering to management and business administration to applied science to finance.

And even all sorts of profession, occupations, economic agents or economic activities contribute to the economy.

The Three Main Variable Components Determines the market equilibrium

  • Consumption – refers to the final purchase of goods and services
  • Saving – putting money aside or at the back
  • Investment – business involvement which returns profit

The Three Main Sectors of Economic Activities includes:

  • Primary – changing natural resources into primary product
  • Secondary – includes manufacturing and construction
  • Tertiary – also known as the service sector or service industry. It is more on extraction of mining, agriculture and fishing.

It is very important that a person should know what economy is, how it works and how essential it is in every individual and to the entire community, country or universe. Once you are aware what economy is all about, you will determine if a particular city, locality or country is progressing advancing or regressing. When the economy of a particular area is regressed the people’s consumption, savings and investment are also affected.

Stock Exchanges

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New York Stock Exchange, New York, NY 10005, USA
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Dow Jones

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London Stock Exchange, London EC4M, UK
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FTSE London

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Amsterdam, The Netherlands
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Tokyo, Japan
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Eschborn, Germany
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DAX Frankfurt

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Shanghai, China
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Shanghai Composite

What is an Economic Recession?

Recession in economics is the word that usually illustrates the reduction of a country’s gross domestic product (GBP) for at least two quarters.
In the dictionary it is usually defined as a period of reduced economic activity.

The private organizations define this as a significant decline in economic activity spread across the economy which lasts more than a few months.

When recession occur the business owners and operators, the private sectors and big companies and even corporations reduced workers by getting them dismissed from the job. Thus the number of unemployed people increased, fewer jobs, falling incomes which are very frustrating and painful for various families, the retail sales are reduced and the housing and car markets are slowing.
Every individual in the locality, city, country and in the whole world are affected when this condition happens.

Economy Looks Exactly Like Great Recession Did - US May Be In Crisis Tomorrow

Three Reasons why Recession Happens

Trouble with Credit which are characteristically confirmed in five to ten years cycles

Problems with the Interest-risk – like the SNL Bank condition in the 1980’s

Troubles with Liquidity – Illustrated that current financial conditions are credited to liquidity issues.

Guiding Principles to Evade Recession

Devaluation or Deflation – Dollars deflation is not predominantly a guidelines, it just occur, it just happens. Hence, the weaker currency is increasing the country’s export sector and could help staying away from recession.

Cutting Tax – Boosting up consumers non-refundable income. Nevertheless, people might not spend it as they worried about the future.

Cutting Interests Rates – Lowering the interest rates, reducing mortgage interest payments can provide consumers more disposable revenue.

Since everybody is affected by a recession it is very important to every individual not just those who are in the government but also the entire nation to be knowledgeable enough regarding this condition and everyone should have an idea how to handle this kind of situation, and of course to take some necessary steps to contribute help in overcoming this.

I think unity, cooperation, combining of ideas and suggestions of the entire citizens of the locality, city or country can somehow contribute help to this kind of condition. Thus it is very essential to everyone to have current ideas about what’s going on with the country and how its’ economic stability stands.

Have you ever been negatively effected by an economic crisis?

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New Global Recession in 2014?

Just as many people are thinking that the economic crisis is over its top, the economist and Nobel prize winner Eugene Fama is ruining the party. According to Fama a global recession in 2014 is still lurking.

He is particularly concerned about the funding of the public debt in the United States and Europe. The optimistic U.S. jobs figures do not reassure him. The recent decline in the U.S. unemployment rate to the lowest level in five years is according to Fama just because people all have stopped applying for jobs out of sheer frustration. He suspects that the worst is yet to come and that the previous recession still has a firm grip on us.

Overdose: The Next Financial Crisis

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FlourishAnyway profile image

FlourishAnyway 2 years ago from USA

Oh, say it ain't so about a new economic dip in 2014. I enjoy NYSE stock trading and have done well, but like many others I am biting my nails waiting for the correction that many people say is overdue.

raymondphilippe profile image

raymondphilippe 2 years ago from The Netherlands Author

Maybe it will, Maybe it ... I wish i could tell you with certainty ;-)

DDE profile image

DDE 2 years ago from Dubrovnik, Croatia

Interesting and informative hub on the economy you know exactly what you are talking about and I learned from this hub.

Nancy Owens profile image

Nancy Owens 2 years ago from USA

My father says the same thing. He says that we are starting a new real estate bubble and that the recent climbs in value are going to flatten out.

ologsinquito profile image

ologsinquito 2 years ago from USA

Where I live I still see people out of work and up to their ears in debt, so it doesn't appear as if the economy is doing well. Interesting article.

raymondphilippe profile image

raymondphilippe 2 years ago from The Netherlands Author

I live in the Netherlands and I discrepancy between what our government wants us desperately to believe (and the stock exchanges too) and the growing unemployment numbers hitting the young and the old alike. Thanks for commenting.

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