How would a recession affect the average American?
Nov 06, 2008 in
Economics
toucansam456
The last time the US was in a recession, as I remember as a young child was in the early 90′s under the first Bush. I don’t understand how exactly a recession affects the economy, and how it differs from a depression.
The last time the US was in a recession, as I remember as a young child was in the early 90′s under the first Bush. I don’t understand how exactly a recession affects the economy, and how it differs from a depression.
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3 comments
GhettoBlaster on November 9, 2008 at 8:07 am
I don’t know either dude but my azz is getting kicked hard as I have big $$$$$$ invested in real estate. My portfolio is losing weight by the minute.
is it 5 yet? on November 10, 2008 at 3:52 pm
slowing economic production means fewer workers are needed, thus an increase in unemployment. It also means less money to spend, so less business for those self-employed.
So how does the average american fare? well he is more likely to lose his job or see a decrease in income, but just more likely. On average, many people will not be terribly affected, perhaps see a slip in thier retirement account.
Lynne D on November 11, 2008 at 12:17 pm
Higher unemployment, worse in some industries than others. Stagnated or decreased wages. Decreased capital income to investment accounts and savings accounts. Prices don’t escalate as much as they become more difficult to reach because of a devalued currency.
Assets depreciate, which tends to hit housing the worst. Housing is a big block of asset, instead of something like stocks which can be sold off at small losses per share. You can’t sell a piece of a house. You can only sell the whole thing.
With rising unemployment, stagnated wages and frozen activity in assets, leading banks to lend less money, it means housing prices will REALLY descend.
But don’t get too excited over that if you’re not a homeowner, thinking you’ll be able to get a house cheap. If you depend on wages for your income the most, you won’t see enough of an increase in your wages or enough opportunity to increase your wages to attract lending for that purpose.