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Us recession

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PriyaRamalingam5493

The document discusses the global economic crisis of 2007-2009. It provides details on: - How the US recession impacted other major economies like China, Europe, and Japan through decreasing exports and economic growth. - Countries like India saw declines in sectors like IT and manufacturing that relied on US demand. - The crisis had varying effects around the world, with some countries like Australia avoiding recession and others like Africa being less impacted due to less integrated markets. - The downturn revealed weaknesses in many economies and their reliance on stable global demand, testing their financial systems and regulations.

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Us recession
 Recession - decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year.  GDP - Indicates health of a country’s economy.  Calculation of GDP Value GDP = C + G + I + NX where, C - Sum of all private consumption G - Sum of Government Spending I - Sum of all country’s business spending on capital Nx - Nations total net exports, calculated as total exports minus total imports
 US economy has suffered 10 recessions since the end of World War II.  The Great Depression - 1930 to 1939 - High Unemployment - Low Profits and Low Prices of goods - High Poverty - Industries that suffered the most includes agriculture, mining - Unemployment 14.3 % in 1937 19.0 % in 1938
 After the Great Depression, the American economy experienced robust growth.  US recession 1982 to 1983 - Tight monetary policy to control inflation - Sharp correction to overproduction.  US recession October 1987 (Black Monday) - Stock market collapse  In 2001, US suffered the 9/11 attacks - Employment dropped by 1.7 million - GDP fell 1.5 per cent
 Biggest Economy in the world  Constitutes 27% of the Global GDP  World’s biggest debtor country  Biggest importer of Oil 27% in 2007  Worlds largest and most influential financial markets
 The collapse of Bear Stearns and the resulting financial market turbulence signalled that the crisis would not be mild and brief. (Alan Greenspan – Ex-Chairman of the Federal Reserve)  US relies upon a body called the National Bureau of Economic Research to rule on the extent of any downturn.  Economists said 28 states would be in recession, with 16 at risk. The predictions were based on unemployment figures and industrial production data.
 Great Depression or Long Recession (weakest recovery)  National Bureau of Economic Research (NBER) dates the beginning of the recession as December 2007 and the end was June 2009.  8.7 million jobs were shed from February 2008 - February 2010.  GDP contracted by 5.1%, worst since the Great Depression
 Unemployment rose 4.7% in November 2007 10% in October of 2009  Nearly 50 million Americans (16%) were in poverty.  Governor David Paterson called an emergency economic session - To push a budget cut of $600 million - 7 percent reduction in spending state agencies
‘‘An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years’’  Decrease in demand for goods and services  Decrease in production and Consumption  Sharp rise in unemployment  Business Investors spend less as they fear stocks values will fall  Raising Government Borrowing  Lower Inflation  Falling House Prices  Decline in Sales  Credit Crunch
 Unemployment rose to 5% in 2007 6.1% in 2008 10% in 2009  Forecasting that unemployment could reach 12% in 2010  Net loss of 3.617 million jobs in 2007 5.052 million jobs in 2009
Us recession
 The Federal Reserve, Treasury, and Securities and Exchange Commission are the deciding authorities.  Tax cuts - Bush government proposed a $150-billion in tax cuts.  Barack Obama introduce a "rescue plan for the middle classes" tax bill for everyone earning less than $200,000 reduced (includes cutting road tolls and increasing loan guarantees that have been offered to small companies)  Spending to create more jobs and boost the manufacturing and services sectors and to prop up the economy.  Steps to help the private sector come out of the crisis.  Drastic half point cut in interest rates.
 After the end of the recession, unemployment decreased 10.1% in October 2009 7.8% in September 2012  The Federal Reserve has kept interest rates at a historically low 0.25% since December 2008  US gained 1.758 million jobs in 2010 2.083 million jobs in 2011 2.236 million jobs in 2012 2.220 million jobs in 2013 857,000 so far as of March 2014.  GDP grew roughly 3% in 2010, 1.7% in 2011 2.2% in 2012 1.9% in 2013  40% are high-paying jobs and 60% are low-paying jobs
‘‘ Whenever the US sneezes, the world catches a cold’’ Weakening of the American economy is bad news, not just for India, but for the rest of the world too.
 Indian companies have major outsourcing deals from the US.  Service industry contributes about 52% to India's GDP growth.  For the first time in five years, India’s export growth has turned negative.  The Sensex crashed by nearly 13% in just two trading sessions in January 2009.  IT companies were predicted a drop of 15% in growth from 30% in BPO sector.
 Most people have sold the shares. People started to save money.  IT industries, financial sectors, real estate owners, car industry, investment banking ect… were confronting heavy loss due to the fall down of global economy.  The textile, garment and handicraft industry are worse effected. Together, they have lost four million jobs by April 2009, according to the FIEO survey.  Indian banks were facing through a tough time of liquidity crunch.  The worries for exporters started growing as rupee strengthens further against the dollar.  The sudden fall in the US economy reduced the growth of Indian IT firms down by 2-3%.  India certainly had some advantages in this financial crisis. The inflation fell sharply, faster than expected.
Us recession
 China Relies on exports to United States  China’s GDP growth slows down from double digit to 9%  Faltering U.S Consumers who buys Chinese goods china’s growth may slow down to 6 to 7 %
 China gets Timber and rubber from Indonesia and Taiwan  U.S recession leads to less Chinese demands for these goods  Taiwan and South Korea transports component parts to mainland - assembled to finished products – shipped to U.S  Both Group of Exporters – Fall and Fall hard if a drop in Chinese exporters
 Recession Arises – Fall in U.S Demand will mean lower Exports by European countries  Lower Sales and Lower Profits European Firms – BMW, Unilever, etc…  Weaker Dollar – Value in Euros – Major Capital Loss  High Oil Price  Deflation of Housing
 Japanese Economy in Borderline between Growth and Recession  Japans Economic Growth – driven by External Goods and Services  Domestic Private Consumption weak - Income and Wages Growth remain flat  Oil hovering at $100 a barrel will make it hard for Tokyo
 Africa, Poland and Slovakia was not affected because it is not integrated in the world market.  Australia avoided a technical recession after experiencing only one quarter of negative growth in the fourth quarter of 2008, with GDP returning to positive in the first quarter of 2009.
 With several insights on how the various industries have been affected by this economic downturn, some had opportunities to grow and some were flattened.  Thus the global economic crisis is inevitable till the economy of the developed, developing countries become stable and self sustainable.  The effects of the economic downturn are a test to check the financial stabilities in market and regulations across the global economy.


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Us recession

  • 2.  Recession - decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year.  GDP - Indicates health of a country’s economy.  Calculation of GDP Value GDP = C + G + I + NX where, C - Sum of all private consumption G - Sum of Government Spending I - Sum of all country’s business spending on capital Nx - Nations total net exports, calculated as total exports minus total imports
  • 3.  US economy has suffered 10 recessions since the end of World War II.  The Great Depression - 1930 to 1939 - High Unemployment - Low Profits and Low Prices of goods - High Poverty - Industries that suffered the most includes agriculture, mining - Unemployment 14.3 % in 1937 19.0 % in 1938
  • 4.  After the Great Depression, the American economy experienced robust growth.  US recession 1982 to 1983 - Tight monetary policy to control inflation - Sharp correction to overproduction.  US recession October 1987 (Black Monday) - Stock market collapse  In 2001, US suffered the 9/11 attacks - Employment dropped by 1.7 million - GDP fell 1.5 per cent
  • 5.  Biggest Economy in the world  Constitutes 27% of the Global GDP  World’s biggest debtor country  Biggest importer of Oil 27% in 2007  Worlds largest and most influential financial markets
  • 6.  The collapse of Bear Stearns and the resulting financial market turbulence signalled that the crisis would not be mild and brief. (Alan Greenspan – Ex-Chairman of the Federal Reserve)  US relies upon a body called the National Bureau of Economic Research to rule on the extent of any downturn.  Economists said 28 states would be in recession, with 16 at risk. The predictions were based on unemployment figures and industrial production data.
  • 7.  Great Depression or Long Recession (weakest recovery)  National Bureau of Economic Research (NBER) dates the beginning of the recession as December 2007 and the end was June 2009.  8.7 million jobs were shed from February 2008 - February 2010.  GDP contracted by 5.1%, worst since the Great Depression
  • 8.  Unemployment rose 4.7% in November 2007 10% in October of 2009  Nearly 50 million Americans (16%) were in poverty.  Governor David Paterson called an emergency economic session - To push a budget cut of $600 million - 7 percent reduction in spending state agencies
  • 9. ‘‘An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years’’  Decrease in demand for goods and services  Decrease in production and Consumption  Sharp rise in unemployment  Business Investors spend less as they fear stocks values will fall  Raising Government Borrowing  Lower Inflation  Falling House Prices  Decline in Sales  Credit Crunch
  • 10.  Unemployment rose to 5% in 2007 6.1% in 2008 10% in 2009  Forecasting that unemployment could reach 12% in 2010  Net loss of 3.617 million jobs in 2007 5.052 million jobs in 2009
  • 12.  The Federal Reserve, Treasury, and Securities and Exchange Commission are the deciding authorities.  Tax cuts - Bush government proposed a $150-billion in tax cuts.  Barack Obama introduce a "rescue plan for the middle classes" tax bill for everyone earning less than $200,000 reduced (includes cutting road tolls and increasing loan guarantees that have been offered to small companies)  Spending to create more jobs and boost the manufacturing and services sectors and to prop up the economy.  Steps to help the private sector come out of the crisis.  Drastic half point cut in interest rates.
  • 13.  After the end of the recession, unemployment decreased 10.1% in October 2009 7.8% in September 2012  The Federal Reserve has kept interest rates at a historically low 0.25% since December 2008  US gained 1.758 million jobs in 2010 2.083 million jobs in 2011 2.236 million jobs in 2012 2.220 million jobs in 2013 857,000 so far as of March 2014.  GDP grew roughly 3% in 2010, 1.7% in 2011 2.2% in 2012 1.9% in 2013  40% are high-paying jobs and 60% are low-paying jobs
  • 14. ‘‘ Whenever the US sneezes, the world catches a cold’’ Weakening of the American economy is bad news, not just for India, but for the rest of the world too.
  • 15.  Indian companies have major outsourcing deals from the US.  Service industry contributes about 52% to India's GDP growth.  For the first time in five years, India’s export growth has turned negative.  The Sensex crashed by nearly 13% in just two trading sessions in January 2009.  IT companies were predicted a drop of 15% in growth from 30% in BPO sector.
  • 16.  Most people have sold the shares. People started to save money.  IT industries, financial sectors, real estate owners, car industry, investment banking ect… were confronting heavy loss due to the fall down of global economy.  The textile, garment and handicraft industry are worse effected. Together, they have lost four million jobs by April 2009, according to the FIEO survey.  Indian banks were facing through a tough time of liquidity crunch.  The worries for exporters started growing as rupee strengthens further against the dollar.  The sudden fall in the US economy reduced the growth of Indian IT firms down by 2-3%.  India certainly had some advantages in this financial crisis. The inflation fell sharply, faster than expected.
  • 18.  China Relies on exports to United States  China’s GDP growth slows down from double digit to 9%  Faltering U.S Consumers who buys Chinese goods china’s growth may slow down to 6 to 7 %
  • 19.  China gets Timber and rubber from Indonesia and Taiwan  U.S recession leads to less Chinese demands for these goods  Taiwan and South Korea transports component parts to mainland - assembled to finished products – shipped to U.S  Both Group of Exporters – Fall and Fall hard if a drop in Chinese exporters
  • 20.  Recession Arises – Fall in U.S Demand will mean lower Exports by European countries  Lower Sales and Lower Profits European Firms – BMW, Unilever, etc…  Weaker Dollar – Value in Euros – Major Capital Loss  High Oil Price  Deflation of Housing
  • 21.  Japanese Economy in Borderline between Growth and Recession  Japans Economic Growth – driven by External Goods and Services  Domestic Private Consumption weak - Income and Wages Growth remain flat  Oil hovering at $100 a barrel will make it hard for Tokyo
  • 22.  Africa, Poland and Slovakia was not affected because it is not integrated in the world market.  Australia avoided a technical recession after experiencing only one quarter of negative growth in the fourth quarter of 2008, with GDP returning to positive in the first quarter of 2009.
  • 23.  With several insights on how the various industries have been affected by this economic downturn, some had opportunities to grow and some were flattened.  Thus the global economic crisis is inevitable till the economy of the developed, developing countries become stable and self sustainable.  The effects of the economic downturn are a test to check the financial stabilities in market and regulations across the global economy.
  • 24.