Top 7 Reasons why Recession in the USA has effects Worldwide

Remember the Great Economic Depression that the World faced in 2009? I am sure you will remember atleast how the newspapers screamed of millions going homeless and penny less. Know where most global meltdowns ignite from? The United States of America when in an economic recession are bound to have effects on countries Worldwide. While Europe is currently facing a major economic meltdown, the effects that the U.S.A meltdown has all over is unparalleled. Remember the occupy Wall Street movementin 2011 with young girls moving naked shouting slogans like they can’t afford a shirt? Well, if you didn’t know what meltdowns are- try watching out how millions of people were lead to commit suicide due to losing almost all they ever had. Wall Street would never again face what it did in the occupy wall street movement, and well, the World hopefully would never witness the same meltdown again. Here’s how a recession or economic depression in the U.S.A. leads to a major economic crunch in most nations worldwide.


7. Education Crunch: Effecting Student Quality Circles

When there is a meltdown in the United States, the first people to get effected by salary cuts have to be those serving the Government organizations. With most community college teachers facing a major cut of salaries, lesser people choose to opt for providing good quality education to students. With a lack of educational facilities doing rounds, the quality of students churning has to be effected majorly. And when the students are not getting proper education, is it fair on the future? Come to think of it, if the youth is not provided proper education to handle emergencies, is there not a major chance of more emergencies arising in the future. And colleges in the United States cater to provide education to students from all across countries worldwide.

6. Multinational Organizations losing Money

With most major organizations of the world not being limited by geographic barriers, most organizations on a large scale have gradually become Multinational Companies. When a company has its funds invested in a number of countries, even if there is a meltdown in one of those countries, it would reflect on the company’s functioning worldwide. Especially with the United States, since being one of the most developed countries in the World, the United States has to its credit a major chunk of investments made by any company in the world. Infact, most multi national companies having outlets in the third world nations or the developing nations have their origin in the U.S.A.. So when a company loses its, it would try to recover the lost money by having cost cuts, salary cuts, major cut downs in number of employees, lower appetite of risk and major pulling out of movable or mobile funds to capacitate for the major losses incurred. The supply by the company is more than the demand by the consumers whereas the supply of resources needed the company is more than the company demands to capacitate its functioning. This causes a major vacuum in how the company settles its funds worldwide caused by recession in just one country where the company has its major foothold.

5. Lower consumption of energy and oil

The U.S.A. alone is known to consume more fossil fuels than many developing countries combined. When the people of the United States are undergoing financial crisis, they are sure to cut down on living costs and consumption of resources. A major cut down is seen in the consumption of petroleum and Energy in the States thus causing the country to purchase lesser oil from Oil based economies like the middle eastern nations. When the middle eastern countries or the oil based economies face a loss of demand from the United States, they are bound to undergo a major economic crunch. They then have more supply of Oil than demand thus giving a major deflation in the cost of oil per barrel. This deflation further leads to economic institutions like banks losing onto a lot of money due to the large investments it makes in fossil fuel resources, oftentimes leading complete shutdowns of these institutions. The institutions then in turn to recover costs lead to higher interest rates and thereby causing lesser consumer expenditure worldwide. When the money is not regulated, most countries ultimately have to face then a major economic crunch or financial breakdown due to lack of regulating currency in the market place. The currency of the nations thus face a major fall against the stronger economies thus causing threats of complete economic melt down as a lower currency means lower import demands.

4. Immigrants Losing their Jobs

The United States has a lot of people from other nationalities working in companies based out of the United States. The first people to bear the brunt of losing their jobs due to the economic crunch have to be people from other nationalities as the residents of the USA facing a loss of employment may further increase the impacts of recession on the country. When people from other nationalities lose their job, they are unable to sustain the expenditures incurred of living in foreign lands and there off they are more susceptible to flying off to their home country in seek of jobs. When such qualified individual are jobless in developing countries, they are not only exploited at much lower salaries but also the effect of unemployment lingers on these nations for long.

3. The Stock Market in a Wreck

Recession is mostly caused by stock market wrecking a havoc and thereby causing investors to go broke. It is when the supply is much more there is demand and thus there is an economic slowdown overall. When the Stock market is in a wreck, the people from worldwide get effected as most companies today have international share trading windows. When the Stocks are facing a major depression, there is bound to be a major breakdown of the economy in all the countries where stock market trading happens and all investors are bound to bear the brunt. Especially with the USA being the super boss of all stock and metal exchange trading, it plays a major role in price regulation.

2. Reduction in Foreign Investment and Funding

When the country is facing a major economic breakdown, the companies based out of the country are sure to face a major cost cutting and thereby will have lesser mobile funds to invest in worldwide startups or in business ventures abroad. With reduced investments from United States based countries, the businesses and economy in other countries are sure to face the effects of the meltdown too, since there are many major investment big wigs based out of the USA. Many times, business ventures of the country in foreign nations are to be stalled due to lack of funding thereby causing a lot of delay in major business developments of the nation. Also the values of Foreign Direct Investment are majorly reduced.

1. The Largest Goods Importer

You might have heard already that if China faces a complete production shutdown for a day, the effects will be seen in the World for a week to follow. The US will fall short of basic everyday consumer durables within a very short span of time. But if the USA faces an economic meltdown and reduces the number of goods imported on a daily basis, most manufacturing and production based economies will bear a brunt of the happenings to the level of facing a shutdown. The surplus these countries will face in within a short span of less than a week won’t let the companies to overcome the cost losses incurred in over a month. The USA has only a very few goods which it produces by its own and relies majorly on import, and when the import quantity suffers, all of the countries which export to the USA will have to face the crunch of the economic recession too.

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