Reason of USA Recession

Gross Domestic Product (GDP) of United States

As a common people on the planet earth, we usually ask ourselves why USA declares recession. Actually recession was not only on GDP. But in some instances GDP value really rock the economy of a certain country because it is the richness of the country if it is very down meaning, it is not safe to invest because your capital or even some of your earnings will absorb by the company on that country.

Now let’s discuss the GDP of the most influential country in the world. The values on this data were covers the period of 1990 to 2007.

It is very notable that the United States of America has an increasing GDP. It has value of 5757.2, 5946.9, 6286.8, 6604.3, 7017.5, 7342.3, 7762.3, 8250.9, 8694.6, 9216.2, 9764.8, 10075.9, 10417.6, 10908, 11630.9, 12364.1, 13116.5, and lastly 13741.6 respectively.

The increase in GDP on a very visible part does not mean okay or good to invest you have to check their increment also. What is the GDP increment? GDP increment means a difference of present year to previous. If the increment decreases this means a very alarming economic crisis now called recession.

To make the story short the US have recession because of a downward trend of the GDP increment. The data below were the GDP increment of the United States of America. (Note all of the data used in this presentation was retrieved in OECD)

Figure 2 show that the increments in 2000 to 2001 with 548.6 to 311.1 and 2006 to 2007 with 752 to 625 increment decreases. This means that the power of the United State of America was getting weak in this period. The strategy used by this two president was not that effective during their time. This also implies that the production were worse and another reason was the goods and services were became less during these period. Meaning the credibility of the country was dropped during this period.

Generally, this is just only one reason why US Government declares recession. Another reason was the bankruptcy of several banks. It just happened because most of them invest in Real State and depositors also failed to pay their bills.