David Podley and Noble Acuff talk about why this recession feels different than other recessions of the past.
First, this recession may be the first many people have been through. People who graduated after the tech bust of 2001 may not have seen a real
People tend to have a short-term memory about other recessions. First, when we’re in the middle of a recession it’s easy to forget that they have always come to an end. When we’re in the middle of a thriving economy, we often forget that a recession may be a few years away.
This is a recession where several industries are falling apart. Banks, car makers, and service providers are all struggling.
Every time we see a boom or a bust, people say, “This time is different.” When the economy is booming, we say, “This is different. The rules have changed.” But inevitably, things slow down. When they do, people often say the same thing, that things have changed.
On the macro scale, things are different right now. But on the micro scale, it’s not. On the macro scale, the banks are re-thinking their lending practices (to say the least). On the micro scale, people are making decisions at home of what to spend their limited resources on. And yes, many people are worried about either finding a new job or keeping the one they have.
The tone from politicians hasn’t been very positive. In the last week or two, politicians have changed from saying the economy is only going to get worse to saying it’s going to get better. This shift has helped people relax a little bit and there’s a little less stress out there.
Recessions can becomes a self-fulfilling prophecy. As people hear that the recession is going to get worse, they slow their spending, thus causing the recession to get worse.
There has been a massive correction in spending as people have shifted their spending from having a savings rate of 0% up to about 5%.
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