Economic recession lasts from six months until a year or two, which could be the worst time frame for a recession. Based on the experience of the United States with its last three recessions, the labor- market recession would last between three to four years. (Schmitt and Baker, 2008) with the actual recession only happening for more than a year and a half. The effects of a recession could be felt longer than the actual span of the recession itself.
There are several telltale signs that a nation or region is experiencing economic recession. MarketWatch lists seven things to watch out for to be full-warned for an economic recession event.
Accoding to MarketWatch, it is important to look at the increase of interest rates in the credit market. Lenders are tightening lending policies because of market troubles. Companies not making any profits is another sign of a recession. Skyrocketing oil prices are also indicators of a recession. Oil prices have big effect on the economy, especially if the economy is experiencing little growth. Oil is not the only one increasing their prices. Prices of essential commodities are also increasing. But the stocks and property prices are going down but nobody is purchasing them.
Housing problems and foreclosures are also clear indicators. Foreclosures happen when people and consumers are unable to pay mortgage and finance homes. Borrowers are failing to pay back loans for homes, vehicles, businesses and credit cards. Even banks and credit unions are missing out payments for their financial obligations due to borrowers unable to repay their loans.
There is also a relative increase of people truing to pay their bills with credit cards. Credit card purchase is increasing. This means that people are having problems paying cash. Using credit card to pay for loans despite excessive interest rate shows desperation.
Consumer spending or making sure that the money from the consumers return to the economy is also something to check. Government intervention in economic crisis resulting to fruitless efforts can also be a warning.
There is also a relative increase of unemployed people. During an event of a recession, companies tend to release workers due to low production demand. Low production demand means lesser income for the company owners. Companies and firms are then obliged to release employees to reach the target income. For the last seven years, unemployment has been rising steadfast in the United States. Overall employment, which is still high is historical terms, is declining since the start of 2008.
So how can ordinary people foresee recession?
AOL listed some interesting real life indicators that we are experiencing economic recession. People are stealing not only the whole car but different car parts from vehicles in parking lots. An example is a catalytic converter, which helps the cars emissions. Meanwhile, inside retail stores, lesser people are shopping for merchandises. They are now opting for wholesale store membership.
Personal and family affairs, like weddings, are also being regulated in terms of guests and food. While corporations are cutting back on country club memberships and out of town travels.
Car companies are having difficulties getting buyers even with lots of incentives. Suddenly, the most popular restaurants in town does not have any waiting list at all. Small and local business are closing because they cant keep up with the expenditure.
There can be countless ways of figuring out if a nation is suffering from a setback like an economic recession. But if these signs can be immediately detected and can give us a hint on our economic and financial future, then we should be better learn how to read the signs. Or we might not have the future.
There is no doubt about the fact that an economic recession is upon us. The question we are all now asking ourselves is how best to get through this. There are really only three outcomes. We could actually prosper during this time, we might not be affected at all, (or perhaps just a little) and finally, we could be financially devastated. Obviously, our wish is to prosper regardless of the economic conditions. So the question to ask ourselves, if how can we do that? History shows us that the economy ebbs and flows. We experience times of high economic growth, then times of stability and finally, times such as these, when the economy takes a major downturn and we find ourselves in a recession. Occasionally, this then becomes a depression. We do not have to be frightened by this economic recession. There is so much hype in the media that sometimes it puts people in panic mode. It would be a good idea to get a little education on the causes of recessions and how to cope with them. I highly recommend a book by William Bonner entitled "Financial Reckoning Day: Surviving the Soft Depression of the 21st Century". Perhaps you can find a copy at your local library. Most libraries will order a book if it is not yet part of their inventory. It is important that we are very careful about the way we are spending our money during an economic recession. Obviously, we still have to eat and most of us have to drive our cars to and from work, so food and gas would be classified as necessities. We should also try to save some money, even if it is just a little, for the possibility of even tighter times ahead. Right now the cost of vehicles has come right down. The automakers are really hurting and are offering some great deals. It would not be wise to be sucked in. Maybe we can afford that shiny, new car this month but what if we lose our job in a few months time -- what is going to happen to our ability to pay our car loan then? There are numerous way to earn a little extra income. One idea that comes to mind is renting out those few extra rooms in your basement or home. With so many people losing their homes, there would be no trouble at all getting those rooms rented out. Another viable option is to start a home-based business. It has been reported that this is possibly the best time in 70 years to build a profitable business. A study done by McGraw-Hill Research found that those companies that maintained or increased their marketing throughout the 1981-82 recession saw an average sales growth over the next five years of 275%. Companies who cut their marketing saw a minimal increase of only 19% over the same five year period. This is actually great news! I am sure we realize that these fluctuations in the economy are inevitable, but they do not have to adversely affect us if we make smart decisions and take a few very specific actions. Internet Marketing is where millionaires are being created right now. People are doing this from the comfort of their own home. Did you know that Robert Kiyosaki and Donald Trump have both said that if this way of doing business had been available to them earlier on in their lives, they would have definitely made their millions networking over the Internet. It is my recommendation to you that you take this economic recession that we have found ourselves in and use it to your advantage. I wish you every success.
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