Psychological Effects of Recession on Society As it is defined by Wikipedia, recession describes the reduction of a country’s gross domestic product (GDP) for at least two quarters, meaning the period of reduced economic activity (Recession).
In its turn, economic recession, according to National Bureau of Economic Research (NBER) implies “a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales.” (Business Cycle Expansions and Contractions) It is obvious that economic recession influences society, and negative impact recession has on the countrys economy inevitably produces negative psychological effects on society. It causes psychological depression, undermining hope and energy, and, in turn, undermining the ability to recover. In order to understand psychological effects of recession on society, it is important to trace the causes and reasons for United States current recession. The U.S. housing bubble has lead to housing market correction. Subprime mortgage crisis has also significantly contributed to current economic recession The U.S.
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citizens, in their majority feel no confidence in the future and feel that their financial stability is being eroded. No wonder that for the first time in over two decades the U.S. economy experiences significant private consumption fall. The U.S. citizens face threat of losing jobs. According to the Bureau of Economic Analysis, approximately 156,000 jobs were lost in September 2008.
By November 2008 over 533,000 jobs were lost, accounting for the largest single month loss I 34 years. (Recession) Overall approximately 2.6 million jobs in the United States were lost (2.6 million U.S. jobs eliminated in 2008).
According to the Labor Department’s unemployment report, there also was a significant damage across both U.S. workers and businesses, affecting employees irrespective of their professions and education, both white-collar and blue-collar workers, college and university degrees holders and people without school diploma (2.6 million U.S. jobs eliminated in 2008).
The year 2009 seems to continue negative trend, as employers continue to cut workers hours and increasing the percentage of proposals to go part-time.
According to statistics, the average work week in December 2009 constituted only 33.3 hours, the lowest figure for the past forty years (2.6 million U.S. jobs eliminated in 2008).
What is even more dangerous is that this tendency continues to worsen, as there is no slightest sign that economic situation would stabilize soon. It is estimated that 2009 will bring another 1.5-2 million job cut, increasing unemployment rate to 9-10 percent. Obviously, all these facts contribute to psychological recession. People spend less money on the things they, otherwise, were spending on even when they had no need to. These changes in mood have negative impact on such areas like charitable giving.
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People also spend less on organic goods and such areas such as sales of ethical goods and environment-related projects. In such unstable and tough times, the workers are not likely to move jobs, as they prefer their current job security. During the recession people become very vulnerable and fear for their stability and future. To a certain extent economic recession positively influences people. The workers become more organized and put extra efforts to uphold their company reputation, work harder (often at no extra cost), as they are more afraid to lose the job. The workers become more loyal to their company, and are more likely to maintain extremely high levels of punctuality, attendance and responsibility (Impact of economic downturn on psychological contract between employer and employee).
They are also more inclined to work extra hours when it is needed, to show better attitude to the customers and colleagues, trying to become as helpful as they can. The employees are also more likely to come up with new ideas and they put an extra effort to show their devotedness and desire to be useful for their company. In such a way, it can be supposed that economic recession can also have positive psychological impact on society. Yet, it should be mentioned that psychological impacts caused by recession on people are mostly negative. As people feel extremely psychologically and economically vulnerable, they have more chances to become victims of various psychological disorders. Depression rates are also tend to increase, along with the suicide rates. People feel extremely unprotected and have no confidence in the future. The society feels less optimistic, as the people are assaulted by the impression that despite their education and hard work they fail to control what happens to them (A Psychological Recession Hits Business) .
Their motivation level also decreases, negatively affecting their productivity at workplace. As they feel that they are perceived as a cost and not a resource, they don’t do their best and they don’t stay (A Psychological Recession Hits Business).
The employees have feeling that they are not significant and their work is useless, being affected by severe emotional and insecurity, resulting in disrupted education, poor health and broken families. Works Cited 2.6 million U.S. jobs eliminated in 2008. 10 January 2009.
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3 March 2009 . A Psychological Recession Hits Business. 6 November 2007. 3 March 2009 . Business Cycle Expansions and Contractions. 209. 3 March 2009 .
Impact of economic downturn on psychological contract between employer and employee. 28 November 2008. 3 March 2009 . Recession. 2009. 3 March 2009 ..
