International Journals of Marketing and Technology
Year : 2011, Volume : 1, Issue : 5
First page : ( 213) Last page : ( 224)
Online ISSN : 2248-1058.

A comprehensive study about the repercussion of recession

Arora Richa, Mahankale Nitin R.

Symbiosis International University, SCMS-UG, Pune-14

Online published on 29 June, 2013.

Abstract

The fear of a recession looms over the United States. And as the cliché goes, whenever the US sneezes, the world catches a cold. This is evident from the way the Indian markets crashed taking a cue from a probable recession in the US and a global economic slowdown. An economy which grows over a period of time tends to slow down as a part of the normal economic cycle. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stocks values will fall and thus stock markets fall on negative sentiment. The Indian stock markets also crashed due to a slowdown in the US economy. The realty sector boomed but could not sustain the momentum for long, and it collapsed under the gargantuan weight of crippling loan defaults. Foreclosures spread like wildfire putting the US economy on shaky ground. This, coupled with rising oil prices at $147 a barrel, slowed down the growth of the economy. How to fight recession? Tax cuts are the first step that government usually takes in fighting recessionary trends. Government also hikes its spending to create more jobs and boost the manufacturing and services sectors and to prop up the economy. The government also takes steps to help the private sector come out of the crisis.

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Keywords

Recession, layoffs, Depression, GDP, Economy.

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