Why do businesses stop spending in a recession?

Question

Why do businesses stop spending in a recession?

Answer 1

During a recession, actually the purchase power of public goes down drastically, due to inflationary trend of the currency and deerness  of commodities  and services. A company, or a business therefore left no other way but to cut down production to match the diminished quantum of demand of their products and avoid staggering inventory or push old inventories in place of fresh ones, which may even tell upon their goodwill in turn, a further point of agony.

Usual spending over raw materials therefore diminishes. Moreover, to match their survival in reduced demand level, other expenses, like overheads, staff expenditure etc.has to be brought down. This, sometimes, initiates lay off even which affects growth and concern for the nation.

Answer 2

In a recession, the revenues of most businesses decline. To make a profit, or avoid too great a loss, the businesses have to cut expenses.