- The stock market declines and enters a bear market
- Investors start buying Treasury Bonds and this causes the interest rates to fall
- Employers reduce new hiring and then they start laying off workers
These are the major effects of a recession. In order to revive the economy, the Federal Reserve usually starts lowering interest rates to start business lending and to give impetus to investment. In addition, occasionally during a recession, the Federal Government may introduce tax breaks to get consumers to spend.
The US is currently facing a slowdown in the economy and recession seems eminent. This slowdown started with the decline in the housing market, which was began with the sub-prime mortgage crisis. As a result the home values have fallen by as much as 10 percent and if recession sets in, values will decline by another 5 to 10 percent.
The biggest effect of recession will be unemployment. It has been seen that many companies cutting their weekly budgets and job seekers are no long welcome. Female workers are usually the first to get laid off during a recession. These are women who work as receptionists, do odd jobs in the office, public relations and communications. They are usually the first ones to be picked out when downsizing in an organization begins.
In addition, recession also has effects on business like advertising and sales because these will be expenses that most companies will cut first. Many companies have large budget for advertising in print and electronic media and when recession hits, all forms of advertisement are stopped or reduced at lower budgets. PR companies end up working on very tight budgets and the only retain employees who are needed the most.
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