The U.S Department of Labor mentioned that losses in the construction, manufacturing and retail businesses are increasing continuously and jobs are beginning to decline as a result thus the current reported unemployment rate is 6.1%. 760,000 jobs have been lost due to cost cutting, downsizing and lay off practices in organizations due to the economic slowdown. The workforce is obviously growing that means supply of labor is growing and demand is decreasing thus employees are getting paid less than usual. 401(k) programs have lost their usual popularity and employers are dropping the program now.
This just proves that the economy has slowed down and is in a recession since economic growth fell by 0.2% in 2007 and increased by 0.9% in 2008 and then it was 2.8% during the end of 2008 and the growing financial crisis is the basic reason for the slowdown in economic growth and economic growth will continue to decrease due to the financial crisis. Since consumer spending and business investment is decreasing the economy is lagging as a result. Economic growth is now a 0% which is a horrifying scenario similar to the Great Depression. GDP has been affected badly since investments in house building had fallen by 18% in 2007 but it kept on declining along with other components of the GDP thus the GDP fell and lagged as a result. This shows the economy is at a risk and it is declining on a continual basis since previously economic downturns did go upside but this time the situation is unpleasant.
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