Urban Studies

Recession 1

Economic Recession

Economic recession or simply recession is defined by Investopedia (2008 ) as a significant decline in activity spread across the economy lasting longer than a few months . This economic failure or weakening is manifested by depression of investment , employment , real gross domestic product (GDP , industrial production , and wholesale-retail sales Technically , the reliable indicator for recession in a country is its existence for a period of two or more successive quarters in a year . The United States is one of the countries speculated to be undergoing a state of

economic recession over the past years

Growth and development of cities are clearly dependent on its economic stability . In U .S . cities in particular , they are vulnerable in that their progress relies upon their economic and social health status which in turn are subject to their industrial structure and state expenditures . As such if the U .S . economy in general is affected , it follows that its individual states specifically urban centers are placed in trouble as well . Further , it would result to fewer jobs , less disposable income , lower pay and rising prices when people are put in such difficult situation . Sounds intimidating but let us get into the factors that cause recession

Economic recession can come from various sources . Some causes are domestic or internal in origin , stemming from policy mistakes on behalf of the economic authorities (tutor2u , n .d . This may occur due to high interest in local banks which is too demanding for its clients to meet Higher interest rates lead to a reduction of expenses by customers and may steer bankruptcy of business establishments and unemployment

External shocks can also bring about recession (tutor2u , n .d . An example is the changing oil prices in the world market . A sudden increase in world oil costs affect inflation

Recession 2

rates and greater wage demands . Crises elsewhere in the world may have a reverse purchasing effect on the government and its consumers

Another concept espoused is that recession is merely a social epidemic or a financial speculation that is a mental and emotional state and spread by media . As soon as gossips and news are disseminated regardless of whether they are true or not , people and investors begin to be indecisive about spending and in putting in capital for investments . And because of the effects of these speculations , the rumors and hearsays will then have truth and may indeed cause an economic recession

National debt is also seen as a major cause of recession . When the government spends or invests more that the taxes it collects , this results to a deficit and can affect the nation 's economy . These debts can either be internal or external debts depending upon where the government owes money to

Finally , devaluation is considered a cause or recession . This means a decrease in the value of money relative to other currencies . However this is with reference to a baseline value within a fixed exchange rate system

It is believed that domestic and global...