2001 USA RECESSION In 2001, there was 8-month recession. It started in march 2001 and ended in November 2001. The economy fell down by 1.1% in the first quarter. In second quarter the economy improved by 2.1% but again fell down by 1.3% in third quarter. In the fourth quarter economy recovered and grown by 1.1%. CAUSES This recession was due to Y2K. In 1999 there was a boom period for all companies related to computer technology, because many people and companies bought new computers to make sure that their computer is Y2K complaint. So every company related to computer was in profit and their shares price were increasing very fast so as a consequence of it many investors started in computer related companies. They were not bothered whether the company is in profit or loss, they were just expecting it to be high. In 2000 computer sales started going down. The Federal reserve just ignored the market and keep on increasing the interest rates. The interest rate reached 6.5 percent by may 2000.Interest rates were high when the economy needed it to be down for cheap …show more content…
Moreover, the 9/11 attack made it worst as the New York stock exchange market remain closed for four days after the attack. The stock market reopened in September 2001. The Dow jones industrial average fell 7.13%. IMPACT As a consequence of this recession tax rate went down which helped people to have money them, moreover interest rates went down for cheaper credit. The Fed continued lowering the interest rates till 2003 that forced bank to earn less revenue. In 2004 Fed again started raising rates which put many mortgage holders in trouble as they have to pay more interest. Secondly, it low down the growth in economy as it was just increased to 1.8% from 1% in 2002. In 2003 it increased to just 2.3 percent. By cutting the tax rates effected the government income but in the long run it was effective. UNEMPLOYMENT
First, we need to understand how the Great Recession occurred. It all started with President Ronald Reagan in the 1980s. Reagan was famous for his supply-side economic views (Amadeo 1). He used top-down economics meaning he used government intervention to give businesses tax breaks and subsidies to create economic growth. With this he also started a continuing phenomenon to deregulate Wall Street. He believed this would create vast economic growth and it did. But it created a bubble and it
Today the United States Americans more than ever; there is a constant fear of an awaiting recession due to the economy. The recession in the later 2000’s has been known as the greatest economic decline since the Great Depression. The United States of America, the banks and businesses are not able to succeed and are failing due to the market. Many people across America cannot afford their homes or bills due to the unemployment rate that seems to keep increasing. Many people blame this on the higher oil or gas prices, and the wars that the United States acts on. The recession has overall declined our economic activity in business profits, employment, and investment. This is all due to our falling market, and the rise of prices that so many Americans cannot afford.
This is how 9/11 affected the economy over the years. The 9/11 attacks had both immediate and long term economic impacts, some of which continue to this day. The attacks caused the Dow to drop more than 600 points and the 2001 recession to deepen. It also led to one of the biggest government spending programs in U.S. history, the War on Terror.
During the Great Depression they had the Dust bowl that caused a big change for them. THe Recession had the housing bubble it was also called the National Housing Act that was passed by Congress in 1934 and set up the Federal Housing Authority (“HUD.Gov by the U.S. Department of Housing and Urban Development”). This agency encouraged banks, building and loan associations, etc. to make loans for building homes, small business establishments, and farm buildings. If the FHA approved the plans, it would insure the loan (“National Housing Act by John Simkin”). The Most of the borrowing that took place during the housing bubble was mostly mortgage debt. Low interest rates and the expanded availability of mortgage loan especially “subprime” mortgages which extended credit to borrowers with weak financial records—made home ownership more attractive and attainable for millions of Americans. With the expectation that home prices would keep rising, people not only bought more houses, they also bought bigger houses and accelerated renovations of existing homes (“Cause the great depression by Muddy Water Macro”) .The recession was an economic downturn which means nothing was an order doing this time.
The stock market was closed for four days following the attacks. On the day that the markets reopened, the Dow had a 617.78 point loss, this was a fall of 7.13%, the markets closed at 8,920.70 (Kimberly Amadeo). This loss was the Dow’s worst one-day drop ever. At the close of trading on the Friday following 9/11, the Dow was down almost 1,370 points, representing a loss of over 14% (Marc Davis). The week after 9/11 had the biggest losses in NYSE history (as of 2001) where an estimated $1.4 trillion was lost in those 5 days of trading (Marc Davis). In combination with the recession of 2001, the stocks continued to fall. The stocks hit rock bottom on October 9, 2002, when it closed at 7,286.27 (Kimberly Amadeo). This was a 37.8% decline from its peak. The losses of the stock market added to the costs of
An economic recession occurs when the economy is suffering, and unemployment is on a rise. A drop in the stock market and a decrease in the housing market will also affect the economy due to a recession. Higher interest rates affect the economy constrain liquidly or the cash available to invest in stocks and businesses. Inflation alludes to the rise in prices of goods and services which also puts a strain on the economy further adding to a recession. Businesses were lost and consumer spending dwindled the only category that remained safe was healthcare. The economic meaning of a recession is a decline in the Gross Domestic Product (GDP) consisting of two consecutive quarters on a decline. If the economy is bad consumers are less likely to spend money on goods and service. The effects of a declining economy forced the government to create monetary
Firms cut back on purchases of produce goods and the consumers cut back on the purchases of consumer goods (Galbraith 117). This uncertainty mixed with the stock market crash created the biggest recession America has ever seen.
Similarly, the Great Recession was due to consumer spending cutbacks and a drop in demand for the establishment of new housing. In the two decades previous to 2008, the American growth rate was very high. Their household needs also became very high, which made demand increase. Spending was at a high. However personal income was decreased. The consumers then had to borrow money from the banks. This gave the consumers debt. So, when the house prices rose, banks stopped loaning money to people and the people decreased their spending. This happened because the people were not able to pay the banks back. People also cut back on buying or making new houses, so household demand dropped. Many say that this decrease caused the Great Recession. Housing was one of the main subjects that many believe, caused the Great Recession. “Subprime” mortgage availability and low interest
The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production. At the same time, stock prices continued to rise, and by
Which caused the United States to enter the second dip of the recession to happen since the high inflation rates caused the businesses to stop investing more during the times of 1980 through 1982 (Thayer Watkins Syllabus website).
Everybody in the United Stated was affected by the recession that began in December of 2007 and spanned all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. “The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession”. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses
The Great Depression and Great Recession were two unique events that had monumental impact on the economy. Both had similarities, and differences that made them unique. The Great Depression was caused by people living on credit, and when it was time to pay they didn’t have the money, this happened on a wide spread scale. The crashing of the stock market was what officially started the Great Depression in 1929. The great recession was caused by subprime mortgages as well, as risk taking by financial institutions. Much like the depression people were living over their heads, and when it was time to pay their bills they were unable to. Both the Great Depression and Great Recession were brought on by bubbles, for the Great Depression it was the stock market bubble, for the Great Recession it was the housing bubble.
Ever since the Recession of 2008, the process of acquiring employment has become extremely challenging and exhausting. After months of searching, a significant amount of job seekers are willing to accept any job offers that will allow them to put food on the tables. If you follow the United States’ economic recovery, you probably know that there are about 10.5 million unemployed Americans and constant debates about how to create more jobs. What you may not know is that there are actually four million open jobs waiting to be filled. So how is it possible and who is there to blame?
On the 26th of November 2001, the National Bureau of Economic Research, declared that after ten years of economic expansion, the United States was in a recession as of March 2001 (Coplan 9). During the last quarter of 2001, the United States experienced a terrible tragedy; the 9/11 terrorist attack. However, economists believe that even if the terrorist attack had not taken place, the recession would have still been present, but it did in fact delay recovery. The recession of 2001 was by far different than all the other recessions. It was in fact, better than other recessions because the 2001 only lasted a quarter. Real GDP barley changed and the unemployment rates slightly rose (Nordhaus 2). It was found that banks have improved their performance during the recession, they were prepared for the worst this time around. During the 1990s, risk management became an important factor for banking discipline. Using risk managements, it gives the economy a potential to increase the stability. Thereby, banks benefited from an environment that rapidly declined short term interest rates, which enabled them to borrow at a lower cost (Schuermann 2). These risk managements played an important factor during the recession while impacting the United States economy in a positive manner.
This recession has been the biggest economic struggle in my lifetime. Everything that could go wrong went wrong. The event that led to this recession is the housing crisis, where banks were giving out loans, almost without any restrictions. People were getting involved in one of the best economic times in our history. Confidence was everywhere and the ideal mindset hit everyone. When the economy hit all new highs, people thought the supply and demand chain would continuously rise. The business cycle seemed to be a lie to many Americans. However, the business cycle is real and the world lives a part of it everyday. When deregulation became extreme and private companies, especially banks, got all the power, nothing could stop them