Psychological Impact of Recession

Shahrukh Taghvaei

What is a Recession? A recession is a negative economic growth for

two or more consecutive quarters General slow down in economic activity Recessions generally occur when there is a

widespread drop in spending Solution: government should spend more

while the private sector is spending less, the support of employment while those debts are paid down is crucial

The severity and impact depends on how vulnerable and exposed the respective economies have been with the US economy

The National Bureau of Economic Research, or NBER, is considered the official arbiter of recessions

The last recession ran from March 2001 through November 2001

21 recessions in the 20th century

“Years ago people who sacrificed their sleep, family, food, laughter and other joys of life were called ‘Soldiers’ but today they

are called ‘Shareholders’”

Impact of Recession1. Unemployment2. Fall in productivity3. Opportunities for anti-competitive mergers

Example; the suspension of ’competition policy’ in the United States in the 1930s may have extended the Great Depression

4. People dependant on wages and salaries are more affected than those who rely on fixed income o welfare or benefits

5. Negative impact on health and well-being of people

Psychological Impact of Recession “The psychological downturn, especially when

combined with the current economic recession, is far worse than the 2001 economic slowdown, and its cause is not explained by outside factors like media bias or bickering between impotent “leaders.” This sense of pessimism is rooted in the profound and sustained feelings of vulnerability that many people are experiencing. Anxiety, depression, and a sense of being powerless are a poisonous mix. The tragedy is that focusing on fears only reinforces them. In understandable but irrational ways, people who are frightened move ever forward toward panic. In this way, a psychological recession is self-fulfilling.” – Judith Bardwick

A growing sense of frustration, uncertainty, disappointment, and ineffectiveness, often described as a sense of losing control.

Increasing tiredness, confusion, and malaise, feeling punchdrunk with too many problems to solve.

A feeling of personal isolation from family and friends at home and work.

A sense of inadequacy in family life due to lack of time/money to maintain former lifestyles.

A personal dilemma between the temptation to quit or give in to despair, and the courage or “bottle” it takes to hang on and keep trying.

No motivation or incentive to work Less efficiency in the quality of work