How an Ordinary Citizen May Contribute to the Unemployment Rate

To start off, recession, by economic definition, is defined as two successive quarters of dwindling gross domestic product (GDP). For US, that would be from 2007 to 2009. GDP is the total number of goods produced by manufacturers being purchased by able buyers. When the buying rate of consumers has a harmonious balance with the goods being produced, GDP is at an impressive rate which will indicate the economic strength of a nation, along with many other factors. When we say “dwindling GDP”, one reason for that would be the incapacity to pay on the consumers’ side or the incapacity to produce on the manufacturers’ side. However, the obvious factor that led to these consecutive quarters of shrinking GDP is the “artificial” capacity of buyers to pay. Most purchases were made through credit cards, refinancing, mortgages, loans, so on and so forth, which is beyond the capacity of the consumer to pay “at a later date”. The ending result: slow returns on financial institutions that forced them to file for bankruptcies and lay off thousands of people, thus an increase in unemployment rate due to layoffs.

United States President Barack Obama once said that the unemployment rate and economic crisis the country is suffering from is due to a “culture of irresponsibility”. Do you wonder what he meant by that? Take your part in avoiding bad debt. Do not live beyond your means.