By Julie O’Brien

An economic recession is caused by a variety of situations taking place, when the economy is good the consumer will spend and over spend ending up with large credit card debt and high mortgage payments and no savings.  When supply and demand go up so do prices.
when a country goes to war it causes strain on the economy.  Which in turn has a ripple effect. The first to feel the effects are usually the small businesses that are hit with higher taxes,  they are either forced to downsize or close up shop altogether.

When production slows in any given industry this can effect many other industries such as the shipping industry who depend on the supply and demand,  not to mention the high oil prices which effect everyone. There are often many companies making parts for other companies to complete one product, when company A has a smaller demand in product, companies B,C, D and E who make parts for them, will also have a lesser demand for the parts they make. Which in turn creates a slow down and layoffs.

This leads us to yet another effect in the ripple, the cost of living keeps rising and so does unemployment. Housing costs, heating costs, electricity, water, food,insurance and let’s not forget fuel for our vehicles all keep rising. So with rising costs for the necessities and fewer dollars in our savings, we stop spending money on the wants and put it toward the needs. So now we have the high credit card payments and high mortgages and we can’t make ends meet.  Which leads to homes being repossessed and the housing market dropping out and the banks are having trouble which effect the stock market.

Now that we have mentioned the stock market,  well I think that is a whole different article.  What it boils down to is that when consumers start seeing these ripple effects they stop spending money, those who still have money anyway! And those who don’t,  really don’t have a choice about it.

Oh, and we can’t forget to give mention to Greed.

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