Could anyone tell me what exactly causes economic downturn in the US?

Question

I've researched already, but all I've found is about how a recessions are determined, which is by certain indicators. I do know, however, that overproduction causes economic downturn. Please tell me more factors!

Answer 1

The basic economic theory's of an open and free marketplace are not allowed to exist. Either government or organizations create barriers that restrict competition.

Examples:

Airline industry: Strongly controlled by the government. Southwest Airlines fought for years with our government before they were allowed to start business. They lost money the first 2 years and since then have made a profit every year. Its been about 34 years of profit of providing a lower cost option for us. In addition they have the highest customer satisfaction and lowest complaint rate in the industry. When their competition fails the government bails them out. What incentive do the other airlines have to generate profits.

Education:

Its all controlled by government and unions. These people (not all teachers) care more about getting approval for an increased budget (tax increase) than teaching our children. If we choose private schools we will be forced to pay double. I knoow I can't afford it.

Auto Industry: Is not struggling like they would want you to believe. It just relocated to southern stated where they don't have unions. The strikes of the 80's is going to and is destroying the "Big 3" These numbers will be of memory but close enough to make my point. Gm currently has about 510,000 employess and they have about 490,000 retired. They made agreements with the powerful unions 20+ years ago that they should not have made. They have over paid their employes in the past and todays GM worker is forced to take less pay and benefits or not have a job. It's like social security my generation (I am 34) will never see a dime of the money currently being deducted from our wages. You can argue many of President Bush's choices. He took a beating from both parties and both parties barries their head in the sand. Our country has got some bad times ahead of us.

Answer 2

Recessions  are usually preceded by a shock to the economy  most often causes by  the breaking  of a speculative bubble  in the financial markets or a sudden increase  in the price of an essential commodity, oil or in the past crop failures. The demobilization after major war also usually produce recessions.  These are  result  of an economy has push or drifted away from optimum  allocation of resources and to return to  optimum or find the new one , resources must be reallocated which produces unemployment, business failures and in some cases bank failures which makes things worse. It is not $4 a gallon gas that causes a recession but the dislocation  in the economy as we adjust to the higher price. England has had gas prices in excess of $4  for years and still had a booming economic growth.

Answer 3

Example oil:  Because oil is used in so many products the cost of crude oil keeps going up, that causes other products to raise there prices.  Thus the value of the dollar goes down ( the dollar won't buy as much).  Because we (US) & (world) uses more oil than is being pumped out all the reserves are gone and the price goes up.  This example does not include refineries which produce gas when add that to the mix the dollar value on what it can buy goes down.  Congress has stopped the oil companies from drilling for oil off our coast (and other places) but they allow China to drill off our coasts(Thanks Bill Clinton). These two example only barley touch the surface of our problems.  But I hope you see how one problem effects others industries which causes more problems.