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Economic pressure occurs during a recession or rising costs, causing consumers to cut costs and businesses to generate less revenue. The US government has created laws to ease economic pressure, such as welfare and job creation legislation.
Economic pressure occurs when a company or a country is facing unwanted economic times. For example, it can occur during a recession, when unemployment rates are higher than usual, or after a period of rising costs. Corporations are responding to economic pressure in a variety of ways, such as consumers cutting costs, buying less, or borrowing less money from financial institutions. A period of pressure is often followed by economic reforms.
The economy in capitalist societies, such as that in the United States, typically follows a pattern. First, the company enters a period of surplus, known as a boom. During this time, unemployment levels are low and people have higher wages or more disposable income to use for luxuries.
A period of contraction, also known as a recession, typically occurs after a surplus. The recession period is often caused by an increase in the unemployment rate. People start losing their disposable income and spend less, which results in more companies laying off employees or closing their doors entirely. Recessions typically cause economic pressure on a company.
Economic pressure is felt in different ways by different people. For example, people who lose their jobs find it difficult to pay bills, cover insurance costs and provide basic necessities such as food. Even people who keep their jobs may feel pressure to cut back on their spending out of fear that the poor economy could affect their jobs in the future.
In general, consumers become more income conscious during times of economic pressure. Many consumers reduce their spending to basic necessities and reduce or eliminate excess spending. Other consumers refrain from borrowing money they may have trouble repaying in the future, such as personal loans or lines of credit.
Businesses also suffer during times of economic pressure. When consumers start spending less, the business generates less revenue. Over time, this can lead to retail stores closing, employees being laid off, or bankruptcy filing.
In the past, the US government has created laws to try to ease the economic pressure. For example, the welfare system was created to help citizens who could no longer afford basic human needs. Other examples include legislation to stimulate job creation, cutting taxes or offering taxpayer rebates.
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