Skip to main content

IS THE RECESSION OVER?


It looks like recession will be over before we know it. Look at the chart below, which perhaps helps unfold the most potent reason behind the world economy's huge contraction in the fourth quarter of 2008.


Image Source: Business Week
US consumer, the biggest driver of the world GDP chose to cut back massively and instead, opted to save some of his hard earned income. Well, the trend has continued to this day, manifesting itself in the huge reduction in household debt as indicated by the chart above. As per Business Week, savings as a percentage of US household income during the first two months of 2009 is already ruling at 10-year highs and businesses, adjusting to this new shift of lower spending and higher saving have embarked on a major cost cutting drive. The end result? Even a small pickup in demand will help companies post robust bottomline numbers and help bring back confidence in the battered economy. Furthermore, while everyone knew that deleveraging i.e. reduction of debt would be the key to a healthy recovery, we don't think anyone had a clue that the same will happen at such a lightning speed. At this rate, it won't take long for the recession to be a thing of the past.

Comments

Post a Comment

Popular posts from this blog

Learning from #FriendsReunion - Plan Your Bottle Episode

Learning from #FriendsReunion - Plan Your Bottle Episode While watching Friends: The Reunion a while back ( Yes, i am super late, been a very busy week) something  struck with me which the show’s creators said about "budgeting" a term called Bottle Episode.    On Friends - Its one of the most successful television sitcoms of all time. From 1994 to 2004, the show never left the list of top 10 most-watched  television programs.  It was also one of the most expensive television series of all time. By the last two seasons, each of the six main actors earned more than $1 million per episode. From the resources perspective, the show has more than justified that expense since then. As per some estimate Friends earns around $1 billion a year from syndication, merchandising, streaming, and other deals. During the reunion show, creator Marta Kaufman talked about how they planned “bottle episodes” each season to manage the show’s budget....
6 comments
Read more

What if SP comes to power?

I was just wondering, if the Samajwadi Party (SP) supported government comes to power at the Centre this time around, many companies in India might have to write off another kind of loss from their books - loss on account of unused computers. After all, the party’s supremo Mr. Mulayam Singh Yadav believes that - "The use of computers in offices is creating unemployment problems. Our party feels that if work can be done by a person using hands there is no need to deploy machines." Incidentally, the party is also against stock markets, use of English language, agricultural machines, and high corporate salaries!
4 comments
Read more

Jet Airways will start a new no-frills carrier called Jet Airways Konnect

As per a leading business daily, Jet Airways will start a new no-frills carrier called Jet Airways Konnect. The fares for the service will be 10% to 15% lower than the normal Jet Airways economy fares. The company has not launched the new service under its JetLite brand due to pending litigation with the Sahara group. It may be noted that market share of the more expensive full service carriers has fallen due to the economic slowdown. There is a beleif that the airlines industry is value destructive. As Warren Buffett once said, "Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." If only, our air carriers paid heed.
Post a Comment
Read more