What makes the economy go south?

Question

I've been sitting around wondering what factors affect the economy. I know that the housing market is bad, and that gas is very expensive, but what makes the economy fail and struggle so badly?

Answer 1

deflation or under growth

inflation or uncontrollable & unbalanced growth

{all sectors may be the causes for this 2}

are the 2 main factors for the economy to go south

Answer 2

Recession are proceeded by a shock to the economy. It can be demobilization after a war, a sudden increase in the price of a essential commodity (oil or crop failures), or a breaking of a bubble in a investment market and a drying up of investment funds or a credit crunch. The economy is then no longer in equilibrium and a recession is the process of reallocation resources to reach a new equilibrium. This is not an instantaneous process and some people lose their jobs and it takes time before new jobs are created so labor resources are wasted and GDP falls.

Edit: Many people here seem to think that the economy going south is a new phenomena. Look at this graph of our economic history.

http://www.visualizingeconomics.com/2008...

Answer 3

In terms of Amerikan politics, we have foxes in charge of the chicken coop. The short answer is, our "economy" (exactly what backs up all that paper currency?) went WAY too far north.

Answer 4

Immigration. No I'm not just being 'racist'. Backtrack most negative factors in the economy and you can find immigration at the base of it.

Answer 5

The Riches of Europe have combined to form one currency, to compete against the United States!

We are finally beginning to feel the pressure, because nobody(around the world) wants the coveted US Dollar anymore!

Europe has waged Economic War against the U.S.

Answer 6

There is obviously too much of consumption and demand that the supply and resources could sustain. Hence the imbalance and the consequent inflation. What is the antidote? Nature will take care of itself. The society may either tighten the belt and reduce the demand or the supply might be sought to be increased. But, the latter is unlikely to happen, beyond a point. The inflationary pressure is already making the demand diminish and the balancing mechanism is already on work. World has already weathered many a storm. Nothing to be alarmed.