Comments on: What Happens in A Recession?

By: MoralMoney

MoralMoney — Sat, 12 Dec 2009 22:32:53 +0000

This is pretty confusing. Saving is a function of income and both should decrease during a recession. The data usually show that saving at least stops increasing during a recession until the Fed increases the money supply. I think the confusion here is the fundamental difference between trying to “save money” when consuming and saving in an economic sense. During a recession, incomes decline, and because consumption and saving both come from income they should also both decline. People try to “save money” by consuming less but this is because they have less income or otherwise reduced wealth due to a stock market crash. They also have less money to save and this should be made clear. Total saving may increase in the mid-point of a recession but this is only due to the Fed’s actions. It’s also pretty stupid for someone to save their money during a recession only to be left with plenty of saving when things get better and their income increases. It’s much wiser for people to conduct precautionary saving during good times so they can use it during bad times.

By: skatergirl

skatergirl — Fri, 23 Jan 2009 13:38:58 +0000

when there is a recession people are more likely to save than spending as rate of interests are rising..
recession also causes unemployment as firms face less demand for their goods and thus needing less workers to produce goods..demand for most goods and services fall..
there is also a fall in GDP(gross domestic product)
the standard of living also falls!!

By: Balance of Payments in Recession — Economics Blog

Balance of Payments in Recession — Economics Blog — Fri, 23 Jan 2009 07:53:48 +0000

[...] Readers Question: But what happens to the balance of payments in a recession? (from: What happens in a recession) [...]

By: Wine For Beginners

Wine For Beginners — Thu, 22 Jan 2009 14:05:18 +0000

But what happens to the balance of payments in a recession?

By: M wilson

M wilson — Fri, 09 Jan 2009 16:22:37 +0000

I don’t get it. Why do we allow our selves to get like this.