Recession

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It contain causes and effects of recession.it also contain information about the great recession.

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Recession

  1. 1. By – Diksha Saxena By-Diksha Saxena
  2. 2. What is RECESSION?? In economics, the term recession describes the reduction of a country’s gross domestic product(GDP) for at least two quarters. The usual dictionary definition is “ a period of reduced economic activity”. National Bureau of Economic Research(NBER) is the official agency in charge of declaring that the economy is in a state of recession.
  3. 3. They define recession as: “significant decline in economic activity lasting more than a few months, which is normally visible in real GDP, real income, employment, industrial production and wholesale retail sales”
  4. 4. Causes of RECESSION  Currency crisis  Energy crisis  Under consumption  Over production  Fiscal policy
  5. 5. SWOT Analysis
  6. 6. Strengths  Recruiting skilled employee  Low cost work force  Mistakes or the wrong decision can be analyzed  Enough time to maintain work life balance
  7. 7. Weakness      Household income decreases Business profit decreases Buying capacity decreases Demotivation in people arises Living standard of people decrease which tends to -Unhealthy living environment -Unhygienic and low grade edibles demand increases
  8. 8. Opportunity It can be divided into two categories : 1- Opportunities to public  Goods and services are available at lower cost  Slash in the price of real estate  Investment become easy
  9. 9. 2- Opportunities to organization  Bureaucracy and politician becomes more co-operative  The efficient workers are able to survive in the organization, these in turn leads to increment quality goods and services  The remunerations , other expanses are decreased which in turn increases the saving  Policies become flexible
  10. 10. Threats  High unemployment & job cutting rate  Bankruptcies & black money circulation increases  Inflation increases & GDP decreases  Crime graph increases & research rate decreases  Productivity decrease & dumping of product increases
  11. 11. The Great Recession – 2008
  12. 12. The global contraction from December 2007 to June 2009 that resulted in the world economy shrinking for the first time since 1945. The great recession was an ongoing market global economic decline that began in Dec.2007 and took a particularly sharp downward turn in Sept.2008.
  13. 13. Causes of The Great Recession  Housing market  Risk taking behavior  Excessive private debt levels  Oil Prices  Government policies  Over Production
  14. 14. Some major events of the Great Recession  October 9, 2007 - The Dow Jones Industrial average reaches an all-time high of 14,164.53 points.  December 1, 2007 - The recession officially begins. The unemployment rate stands at 5%.  February 13, 2008 - President George W. Bush signs the Economic Stimulus Act of 2008, which gives individuals a tax rebate and encourages business investment.  March 16, 2008 - Brokerage firm Bear Stearns collapses and is bought out by JPMorgan Chase.
  15. 15.  September 15, 2008 - Lehman Brothers files the largest bankruptcy case in        U.S. history. October 6 - 10, 2008 - The US government unveils a massive rescue package for Citigroup. December 9, 2008 - The government bails out General Motors and Chrysler, offering an initial $13.4 billion from the TARP fund. January 16, 2009 - The government unveils a huge package for Bank of America, which includes $20 billion in bailout money and $100 billion in guarantees. February 17, 2009 - President Obama signs into law a $787 billion stimulus package that includes tax cuts and money for infrastructure, schools, health care, and green energy. March 9, 2009 - The dow hits the low point of the recession, closing at 6,547 - down nearly 54% from its October 2007 high. June, 2009 - The recession officially ends after 18 months, making it the longest downturn in post war history. October 2, 2009 - The unemployment rate peaks at 10%, hitting double digits for the first time in 26 years.
  16. 16. Impacts of The Great Recession
  17. 17.  Credit crunches  Reduction in savings  Unemployment  Sales are not picking up  Suddenly cash has evaporated from the market  Profitability is seriously hit
  18. 18. Effect of The Great Recession on India 1.Investments in India in different types of policies of LIC and other insurance companies. Source:- IRDA
  19. 19. 2. Savings Rate in India Source: Commerce Department, Bureau of Economic Analysis
  20. 20. 3.Consumer Confidence Index Source: Hindustan times
  21. 21. 4.India’s unemployment rate Source : Department of Labor
  22. 22. How to come out of recession? It is unhealthy for any nation to be in Recession. So, government will take certain countermeasures to eliminate or reduce the effect of recession Government has 2 plans Fiscal Policies (By Govt.) Government influences the economy by changing how it (Government) spends and collects money Monetary Policies (By RBI) RBI manipulates the available supply of money in the country
  23. 23. Fiscal Policies 1] Tax cuts for businesses or for individuals More money available for spending Demand picks up; Market can recover; 2] Automatic fiscal policy; Unemployment Insurance Some income to unemployed people to spend
  24. 24. Monetary Policies 1] Reduce reserve ratio More money available for bank to give loans 2] Lower the interest rates Individuals take more loan 3] Use its own reserved money to buy Govt. bonds It becomes an income to Govt. to inject money into the market Demand picks up; Market can recover;
  25. 25. Suggestions  Promoting people to purchase and invest in the        market More Spending by Government to create new jobs Limiting production Attractive policies for the people having cash reserve Cut down in labor size Cutting down loan interests and promoting them Organizing investors summit Bringing old closed public mills to the functioning
  26. 26. Conclusion  There is a panic among investors & they are rushing to     get out of risky assets like stocks. As the outcome of all these development the demand for gold has increased. As gold is seen as a safe haven, its price has risen to record high. The industries are sensitive to high interest rate. The RBI & our Government is prepared for any repercussion in the financial market
  27. 27. RBI’s Power or Government’s Power is double-edged sword; Sometimes, their policies to recover from recession can be counter-productive and it may further worse in the situation. Nation’s recession is controlled by the actions of everybody living in that country.

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