00:00today we're diving into a critical economic phenomena recession what exactly are they how
00:21do they impact our lives and the global economy in this video we'll unpack key insights to help
00:28you understand recession from their causes to their far-reaching consequences let's get started
00:35a recession is typically defined as two consecutive quarters of declining gdp signaling a widespread
00:47economic slowdown however the national bureau of economic research and p er uses a broader
00:56definition including income employment and consumer spending recessions are marked by
01:03rising unemployment falling retail sales and reduced industrial production for instance during
01:11the 2008 crisis u.s unemployment spiked to 10% while gdp contracted by 4.3% these indicators
01:21collectively paint a picture of economic distress affecting households and businesses alike recessions
01:29disrupt livelihoods shrink investments and strain public resources understanding their mechanics
01:36empowers individuals and policy makers to respond effectively
01:41recessions can stem from economic shocks like the 2020 covet 19 pandemic or financial crisis such as the
02:042008 housing bubble burst other triggers include high inflation excessive debt and geopolitical conflicts
02:13recessions also vary in shape v-shaped sharp decline followed by rapid recovery example 2020 second one is
02:27u-shaped prolonged slump before recovery example 1970s oil crisis and l-shaped long-term stagnation example japan's 1990s lost decade
02:46each type demands tailored policy responses from stimulus packages to structural reforms
02:57each other in the future in the future history of stock lessons the great depression 1929-1939 so gdp drop by 30% with unemployment hitting 25%
03:19Franklin d roosevelt's new deal programs
03:23revitalized infrastructure and created jobs
03:28in 2008 central banks slashed interest rates and launched quantitative easing to stabilize markets
03:37the u.s congress passed the 700 billion dollar dark program to bail out banks
03:45these interventions underscores the critical role of monetary and fiscal policy in crisis management
04:07recessions ripple across borders
04:10the 2008 crisis reduced global trade by 12% hitting export driven economies like germany and china
04:19protectionist policies often rise as seen with the u.s china trade war
04:25sociopolitically recessions fuel unrest
04:29the arab spring
04:312011
04:33was partly driven by soaring food prices and youth unemployment
04:38governments face pressure to balance austerity with social spending
04:58central banks are front-line defenders during recessions their primary tool monetary policy
05:05by adjusting interest rates and injecting liquidity they aim to stimulate borrowing and spending
05:11for example during the 2008 crisis the u.s federal reserve slashed rates to near zero and launch
05:20quantitative easing buying trillions in bonds to stabilize markets however prolonged lower rates can create risks
05:29such as asset bubbles or reduced savings incentives the european central bank's negative interest rate policy
05:39post 2012 sparked debates about long-term consequences central banks walk a tight drop between short-term relief
05:50and sustainable growth
06:05consumer spending drives 70 percent of gdp in economies like the us during recessions
06:12fear of job loss and income reduction lead to declines in consumer confidence
06:18for instance the 2020 pandemic saw u.s consumer sentiment plummet to decade lows
06:27worsening the downturn paradoxically panic-driven hoarding example toilet paper shortages in 2020
06:36can distort markets governments often use messaging campaigns to restore confidence like the 2009 cash for clunkers
06:47program to boost auto sales understanding this psychology helps policy makers design targeted interventions
06:55well viewers if you didn't subscribe to our channel yet please subscribe now
07:12is
07:17unemployment is a recession's most visible scar in 2020 global unemployment rose by 33 million with youth
07:24and low-wage workers hit hardest long-term joblessness can lead to skill erosion and permanent income loss
07:33as seen in the hysteresis effect of europe's 1980s recessions automation accelerates during
07:43downturns as companies cut costs the 2008 crisis fast-tracked ai adoption in manufacturing
07:51displacing workers retraining programs like germany's cursor beat short-time work schemes
07:59are critical to preserving human capital
08:17real estate often fuels and suffers from recessions the 2008 subprime mortgage crisis
08:23raised 16 trillion dollars in global household wealth falling home prices trapped homeowners
08:31in negative equity reducing spending and deepening the slump recessions also widen wealth gaps the top
08:40one percent often recover faster while stock market rebounds while middle class wealth tied to housing
08:48stagnates post-2008 u.s racial wealth disparities grew with black families losing 40 percent of their
09:12globalization amplifies recessions a factory shutdown in china can
09:17disrupt outdoor production in germany as seen during covet 19 however interconnectedness also aids
09:25recovery post 2008 emerging markets like india and brazil helped rebalance global demand yet
09:35reliance on foreign debt can backfire developing nations like argentina and turkey faced currency
09:42crisis during the 2018 to 2020 global slowdown recessions force a rethink of supply chain resilience
09:51and trade dependencies
10:03recession's paradoxically spurred innovation startups like uber and airbnb emerged from the 2008 crisis
10:18leveraging cheap talent and shifting consumer habits governments also invest in rnt to ignite
10:27growth growth the u.s inflation reduction act 2022 allocated 370 billion dollars to clean energy
10:37however creative destruction leaves losers too traditional retailers like blockbuster collapsed while amazon
10:47thrived adaptability is key for survival in turbulent times
10:52high debt levels magnified recessions post 2008 greece debt to gdp ratio hit 180 percent triggering austerity
11:19riots riots and 825 percent gdp contraction countries like sri lanka defaulted in 2022 amid food and fuel shortages
11:31even wealthy nations face strength japan's debt exceeds 260 percent of gdp limiting stimulus options
11:40managing debt requires balancing austerity with growth a lesson from the eurozone crisis
11:49so viewers we explored critical facets of recessions from central banks to debt crisis
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12:15so readers Mushroom Makepers take good and see you next time
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