Global Economy is on tenterhooks and consumers and producers over the world are reeling under the mayhem caused by the phenomenon called recession. The bail-outs are becoming a norm by the day with major US firms filing for bankruptcy.
It’s a vicious circle. Decline in revenue of firms means loss for them, so they take to cutting costs by downsizing. This in turn leads to unemployment causing decline in the money income of the people which means lower consumer spending, lower demand for goods and services and ultimately no incentive for industry to go for mass production and reap the benefits of economy of savings. Don’t panic! Governments the world over are already taking measures to restore their economies to normalcy.
However the blessing in disguise for the consumers, a slight faded silver lining in this cloud of chaos and desperation is the current cost of living index, which is on the lower side. This means that even though the money income has reduced, the real income hasn’t been affected that badly.
Gasoline has become very much affordable with crude oil prices standing at $39/barrel. Price of vegetables, fruits, milk and other dairy products have slashed down, which two months back was soaring high above, making it beyond the reach of common man.
Houses have become affordable and the people with decent amount of wealth, accumulated over past years and lost in the financial mayhem, can now buy their dream house.
No wonder it sounds very virtual and like being in a bubble or a euphoria: the reality is still very harsh!
It’s a battle and only those countries will emerge victorious that have enough goods and resources stacked to sustain domestic demands over a decent period of time when their economic reconstruction is underway and mass-production doesn’t restart. Because if they were to import goods from international market, then their economy will be further crippled with the demand pull inflation!
But till then, enjoy the low costs and pray that the Recession doesn’t turn into the Depression!
