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There were four major causes for the 2001 recession. They are as follows:
- The technology boom that occurred in the 1990s got carried to unsustainable speculative heights.
- The Federal Reserve Fund caused too much money to be channeled into higher asset prices like real estate and stocks rather than the price of consumer goods.
- The fraud done by corporations, stock brokers, stock exchanges and mutual fund companies, which was considered to right through the financial markets.
- September 11 attacks, which resulted in dire losses couple by the expensive War on Terror.
Although the 2001 recession was bad but it affected just certain industries like airlines. In addition, stock markets were also affected wherein we saw stock prices falling. There was unemployment during the 2001 recession but it was not considered as bad as during other periods of recession.
It is believed that economy of the United States was sustained because of the boom in the real estate market. In addition, the 2001 recession was not so bad because the Federal Reserve pumped money into the financial markets to keep the short-term interest rates low. In fact, during the recession, the short-term interest rates lower than any other occasion. Coupled with this, the tax cuts helped the economy to recover by stimulating investments and enterprise.
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