RECESSION IN THE WORLD SINCE

1900’S

What Is Recession ?What Is Recession ?What Is Recession ?What Is Recession ?

A Recession is a contraction phase of the business cycle.

National Bureau of Economic Research (NBER) is the official agency in charge of declaring that the economy is in a state of recession.

They define recession as :

“significant decline in economic activity lasting more than a few months, which is normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”.

Recession

• Reduction of a country's gross domestic product (GDP)

• “A period of reduced Economic Activity"

History of recessions

Major Recessions

• The Great Depression 1929.

• The late 1990s recession

• The the early 2000s recession.

The Great Depression-1929

The Great Bull Market

• Great American stock exchange boom of 1928-1929.

• Huge bubble where there were high speculations.

• People made huge investments to make big money.

Bull Market sparked by?

• Growth in American industries

• Technological progress

• Increase in productivity

• Rise in national income from 33,200 million to 79,200 million from 1914 to 1925

• Expectation for great future and un-boundless optimism for the market

Stock Exchange Average Rise in Share Prices 1924-1928

0

50

100

150

200

250

StockExchange

24-May24-Dec25-Dec26-Dec27-Dec

INVESTORS BELIEVES

• Investors believed profits from stocks would increase if the tariff bill was passed

• Sparked intense speculation

• Dow Jones Industrial Average increased by almost 35% because expected election of Hoover and his bill

This Bubble was bound to Burst!

The Crash of 1929

• American economic disaster that precipitated the Great Depression which was approximately a 10 year economic slump affecting all the western industrialized countries.

General Causes of the Crash

• Rampant over speculation in market

• People holding companies and investment trusts (which by nature creates debt)

• Bursting of Bull Market economic bubble in August 1929

• Large bank loans could not be liquidated

Direct Cause of Crash of Stock Market

• After Hoover’s election certain people began to doubt if the tariff bill would help the US Economy– Farmers, America’s trading partners,

Democrats, and some Republican’s opposed the passage of new tariffs.

– On October 21, 1929 Senate announces plans to limit tariff revisions

– October 22, 1929 more limits set on tariff bill

Investors Realized - Tariff Bill is DOOMED!!!!!!!!!!!!!

PANIC! PANIC! PANIC!

Black Thursday

• On October 18, 1929 prices began to fall

• Panic stuck out on October 24 “BLACK THURSDAY” after the announcements from the Senate

• Record of 12,894,650 shares were traded

Effects of Depression on Individual

• Thousands of individual investors ruined

• Loss of savings

• Poverty and panic

• Less spending and demand

• Unemployment

• Wages decrease

Decline in Production

DOWNWARD SPIRAL- little output means

less jobs- Manufacturing

output fallen to 54% of its 1929 output.

- 25-30% of work force unemployed

- 12 -15 Million jobless

Effects of Depression on Economy

• Stock prices drop

• Industry declines

• Value of assets decline

• Large number of banks failed.

• Because of tariffs international trade market decreases.

• Causes a world wide depression.

Early 1990s Recession

• Black Monday

• Sharp Recession that hit hardest include “Canada, Australia, and the United Kingdom”

BLACK MONDAY

•Dow Jones Industrial Average lost 22.6% •considered the official beginning to the American recession.

18 October-1987

1997 mini-crash

• Started on – 27 october in Asia.

• Named as:- Global stock market Crash

• Sixth Biggest points loss in its 112 –year.

• This crash halted trading on New York Stock Exchange for the first time ever.

2008-2009 Recession

• In 2008-2009 much of the industrialized world entered into a deep recession.

• The recession is the worst since the Great Depression of the 1930s

AREA’s EFFECTED

Graph – Jan 2006 –Nov 2008.

•Recession due to failures of large financial institutions in the United States

PRESSENTED BY:-Sunny soni-69Sandeep kumar – 60Ajay kumar- 02Amrit Jain- 07Nishant aggrawal – 36Vikas Tomar - 80