Essay: Decrease of Economic Growth

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 slow down. 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 slow down 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. It is true that the economy will take years to go back to its previously good growth and then only will unemployment come to a halt since history proves that after the economy was in a recession in 1991 it took the economy two years and a half to get back to its previous growth. But that recession was not as bad as this one thus, conditions could get severe. Thus the economy is in a bad shape and has slowed down tremendously and unemployment goes hand in hand with it. Thus this factor is given Number 1 as its importance in value (U.S; 2008).