The economic downturn of 2008 has been a major point of distress for businesses and consumers alike in the U.S., including Ohio. The housing market has fallen with minor, occasional peaks and the unemployment rate, along with inflation, continues to rise. Attempts at strategies for overcoming the recession have by and large failed, as the recession has continued for the last 5 years. However, while the situation points to a coming depression, there is at last substantial evidence that economic recovery is possible. Ohio has reached a critical point in the recession, and investment in small businesses and the creation of new jobs must happen in order to stop the downward spiral for the coming years. In order for businesses to thrive they must work together, partially abandoning the concept of competition, and they must encourage spending from the general public through the creation of innovative and uplifting products.
The length of recession is a bit unusual but not entirely far-fetched: in the 1800s the U.S. had a period of contraction that lasted 65 months (Nat’l Bureau of Economic Research, 2013). Currently, this cycle has lasted for 48 months. Employees in Ohio are losing their jobs, while businesses and the number of those self-employed are increasing. Unemployment as a whole in Ohio has risen .5% in the last 6 months. On the other hand, businesses have grown (by .2%), as have Financial Activities, Leisure and Hospitality, and Trade, Transportation, and Utilities (Bureau of Labor, 2013). These all fall in the private sector, which has been known to help the economy, due to increased power in the hands of individuals to solve problems. The Great Depression began with the failure of banks and businesses (Smiley, 2013); today’s Great Recession can end with the continual rise of businesses and instatement of new banking policies. The growth rate in the private sector can contribute to the creation of new which in turn may lead consumers to believe the economy is safe for spending once again.
There are many who may argue that “new jobs” were created and did not lead to a boost in the economy at all- employment rates in Ohio are falling (Bureau of Labor, 2013). The creation of new jobs does not simply mean the filling of old ones; it means creating jobs that have not previously existed. Filling an empty position in the company is good, but the creation of a new business entirely, or the invention of a new product is better. While self-employed persons are subject to the ups and downs of income flow, they are not subject to phenomena such as layoffs. Not only have these jobs increased in Ohio, but in the U.S. on the whole.
One positive in this recession is that individuals have become less interested in attaining wealth and more interested in how they can use it to better the lives of others. People, especially, young adults, have become more optimistic about their lives and more focused on the world around them (Twenge, 2013). In favor of doing work that may not be conventional, many take risks and start businesses in order to do work they love, which can be explained by the increase in employment in the service industries. This growth can be supported by the connecting of businesses to encourage the creation of more jobs, where services and uplifting products can be offered that will, in turn, encourage the consumer to take risks as well- with his or her wallet. Opposing economists have insisted that an economic breakdown is coming for so long that no one dares to take risks. The perpetuating of fear does not create wealth or good business for anyone. Therefore, businesses need to spend less time focusing on competition and loss, and more time finding ways to serve the general public: by innovating the marketplace, creating peace of mind for consumers, and finally achieving the boost in the economy that is needed.
The economy, without any interference, is improving slowly. As long as the private sector continues to grow in the aforementioned areas, there will be gains eventually. A depression remains possible but implementing the solutions from the proposition should prevent something so catastrophic from occurring. At the very least, it would keep stand-alone businesses afloat. The future is only as grim as one makes it out to be; building a positive outlook with the communities of the state of Ohio (and also those across the U.S.) will encourage people to continue to remain employed, search for new jobs, and increase their spending in order to bring this recession into recovery.
1. How do we know we are not currently in a depression?
While depression is not the absence of peaks, we have had many peaks throughout this cycle. Occasionally, unemployment will drop; during the holidays, spending has been increasing since 2010, and currently, new businesses are starting and growing. The GDP must drop below 10% in order for this recession to officially be termed a “depression,” but this has not occurred.
2. Isn’t business projected to decline in early 2014?
Yes. However, this is only if the current growth continues unaffected. If nothing is done to maintain the new businesses being started, they will end.
3. What types of businesses are succeeding?
Service-oriented businesses are growing. Their products are often not physical items, but courses, e-books, and other tools and people can utilize. These businesses also build communities with the customers they serve either via a website or social media. These communities offer inspiring encouragement, which helps to retain customers and bring in more.
National Bureau of Economic Research. (2013). US business cycle expansions and contractions. NBER. Retrieved from: http://www.nber.org/cycles/
Smiley, Gene. (2013). Great depression. The Concise Encyclopedia of Economics. Retrieved from: http://www.econlib.org/library/Enc/GreatDepression.html
Twenge, Jean M. (2013, July 11). How the Great Recession Had (At Least Some) Positive Effects on Young People. RSF Review. Retrieved from: http://www.russellsage.org/blog/how-great-recession-had-least-some-positive-effects-young-people
U.S. Department of Labor. (2013). Economy at a Glance: Ohio. Bureau of Labor Statistics. Retrieved from: http://www.bls.gov/eag/eag.oh.htm