Recession

According to Forbes Magazine recession refers to a considerable economic activity decline which is spread all through the economy, persisting for greater than six months, usually visible in employment, production, and real income as well as other indicators (Ritenour 2). A recession can also be referred to as a period when the economy experiences contraction in size; this means that the workers produce less goods and services. The US has previously experienced both recession and depression in the past. The Great Depression that began in 1929 lasting till 1939 was referred to as the longest as well as the most severe depression to ever hit the industrialized Western world. This depression sparked critical changes within economic institutions economic theory as well as macroeconomic policy. In the US the Great Depression led to drastic output declines, severe unemployment in addition to acute deflation. The 2008-09 economic crisis is widely referred to as the Great Recession. Though this crisis was less severe as compared to the US experienced severe credit crunch in addition to housing recession. The 2008-09 recessions caused considerable unemployment due to business failures and closures.

The Wall Street Journal in 2011 carried an article indicating that according to economists the chances of recession recurring in the US are very minimal (Izzo 2). Recession has been declared as having come to an end. This means that the US economy has either recovered or is out of imminent danger. The financial crisis hit almost all countries worldwide and since it originated from the US, the nation was hardest hit. The fact that the government reacted hastily to caution the country’s economy and the actual recovery that took place is proof enough it is safe to invest now. The American entrepreneurs and the business community may still be experiencing some difficulties due to the actuality that the public’s purchasing power has not fully recovered, however the economy is largely out of danger. The Federal Reserve has overtime placed tougher measures for dealing with the lending institutions. The measures put forward have increased the purchasing power and general output since issues such as the unemployment rates have considerably reduced. It is thus safe to invest and make new hires currently since the US has generally stabilized. This means that the present times are among the safer times to invest in infrastructure as well as hire additional employees.

Economics is the single most economic concept that the company should adopt as a guide. The uses of models which best fit particular situations and best proves its usefulness to the company is essential require to be utilized. Economics additionally involves the adoption of both macro and microeconomics in the decision making processes. Microeconomics will involve the study regarding the economic tendency of other firms and households as well as the determination of prices of goods and services (Ritenour 4). Macroeconomic trends will involve deals with observing the trend of the economy; if the economy is experiencing any downturns then critical decisions will be made to caution the company. Positive and normative economics are additional essential parts in decision making. Positive economics refers to purely scientific predictions; predictions will in a big way assist the company in predicting the economic pressures and turbulences expected in future. Normative economics informs the decision of what is good or bad decision to be taken depending on what ought to happen; this will assist the company make secure and beneficial investments that would never hurt the company even in times of recession.

Works Cited

Izzo, Phil. “Economists See Smaller Chance of U.S. Recession.” WSJ. N.p., 2011. Web. 5 Feb. 2015. http://www.wsj.com/articles/SB10001424052970204358004577030181567944786

Ritenour, Shawn. “What’s In A Recovery? Beware The Flawed Statistic That Is GDP.” Forbes. N.p., 2012. Web. 5 Feb. 2015. http://www.forbes.com/sites/realspin/2012/08/07/whats-in-a-recovery-beware-the-flawed-statistic-that-is-gdp/