The recession we face

A recession “is a prolonged period of time when a nation's economy is slowing down, or contracting. Such a slow-down is characterized by a number of different trends, including: people buying less stuff; decrease in factory production; growing unemployment; slump in personal income; an unhealthy stock market.” (http://money.howstuffworks.com/recession1.htm) This economic downturn must also continue at least 6 months to become a recession. The last recession occurred in 2001, from March until November of that year. Last time to get us out of recession the, “The Federal Reserve has cut interest rates 10 times this year - three of those since Sept. 11 - in a bid to keep consumers spending and help lessen the severity of a downturn.” (http://money.cnn.com/2001/11/26/economy/recession/, from November 26, 2001) This time, however, I’d believe these actions will not help the national economy enough to get us out of recession. Unlike the previous recession, this recession has become too great of a downturn to overcome. First, the jobless rate is higher, and second, this didn’t just occur in America this time, but the whole world. This hurts more individuals and companies than before because of this. Simply cutting interest rates cannot have the same impact on the recession as it did in years past because we cannot look to other countries for help (in trade and business cooperation), and the recession is too deep to get failing businesses out of debt simply by cutting their rates.

When the government told the American people that we were not in a recession it didn’t matter or change anything, because the American people felt this was a total lie, or least not the whole truth. Telling the American people can have a positive impact on the economy in that saying so will cause the American people and businesses to work harder in helping the economy overall, instead of just looking out for their own interests at the time. This is because most businesses realize that when other companies are going out of business, which are connected to their line of work, there is increased chance that their companies will fall under (in times of economic downturn). Telling the American people that we’re in a recession can also have negative impacts as well. After hearing this many Americans will stop spending as they are more fearful that they will lose their jobs and have to save for the future. Not spending money of course decreases the economy and many businesses suffer (as every business needs people paying their services). “Tax increases, budget cuts, and regulatory actions tend to suppress business activity.” (http://www.wisebread.com/can-the-government-help-in-a-recession) This being said, the logical thing to do in this situation would to, first, cut taxes to give people more spending money, and second spend government money on projects and causes that will supply jobs and give money to workers. These projects and causes can include things similar to the highway act and other government paid work projects (like the Hoover dam, etc.) More people working equals more money to spend.