Get ready for another recession

There will be recession again now long after the 2008 recession. As inflation is increasing rapidly, the US government is in the urge to increase the interest rate again. They are bringing recession again.

Back then in 2008 when the Federal Government increased the tax rate the whole housing market collapsed, drastically affecting the economy and which took a longer period to recover. To stop the inflation, is recession necessary?

Inflation occurs when the economy increases with the increase in spending. This leads to the price rise and the currency becomes worthless. When the currency becomes worthless its exchange rate becomes weak.

To tackle this the federal government increases the tax rate due to banks also increasing their rates with no other option. When the economy is growing slowly the federal lower the interest rate and when the economy found to be growing very fast, they increase the interest rate.

Due to which people borrow less money. Hence the spending drops and therefore the inflation drops.It helps people to save money. But the stock market goes down. When the stock market goes down, the cost of business rises. The growth rate of public companies collapsed because of the higher revenues but less earnings.

This could lead to slower economic growth. The rate of unemployment will rise as they will stop hiring more candidates to cut their expenses. Already due to rising prices people are finding it hard to spend and if the recession drives it back it will worsen the situation.

According to the federal government, they are expecting inflation to come down but if it doesn’t then they have increased the interest rate and that’s the only solution. There are 80 per cent chances for the federal government to increase the rate.

If the recession won’t happen and the inflation will continue to rise it will affect every group of people from business to farmers. But recession won’t have any least impact on the economy.

Updated by Shraddha Nagwekar