Our economy is made up of lots of factors.
One of the issues that have been raised a lot is how the financial system can successfully play its role due to the amount of people who would want to borrow money, as well as the other people who would save money, and other factors which involve selling goods and services.
Some of the things that a financial system has been referenced as would be the banking and financial markets. Our economy moves pretty smoothly most of the time, but as many of you know, there have been times when we’ve hit big recessions, like in 1987 and 2008.
When this happens, there are many people, businesses and assets which take a hit. Some people lose half their wealth; lose their job and other financial assets that one may own.
What Is a Recession and What Causes It?
A recession is formed after a series of events. The final result is when the economy has been on a significant decline for the past 6 months. There are 4 factors that happen within those 6 months to officially declare that we are in a recession.
These factors are:
· Income declining
· Manufacturing declining
· Retail sales declining
· GDP growth rate is negative
No one really knows the exact source of what causes the recession to start in the first place. But something people do know which causes a domino effect leading up to a recession is the amount of manufacturing jobs.
Manufacturers receive orders months in advance.
If there is a decline in that sector, then that means there will be less factory jobs, and factories produce lots of things.
For example, retail stores. The goods that they sell – whether it may be clothing items and accessories – all of this will come out of factories. If there are less people working in factories, this will mean that they’re producing less goods. As a result, this will mean they can’t sell as much as they would like to, even if there is a high demand.
Following on, the retail stores can’t produce and sell as many. This will have another effect on employment, as they will not need as many staff. Therefore, many staff are made redundant, hence the employment rate declines.
What Is the Difference Between Finance and Economics?
Many of you may ask what the difference between finance and the economy is.
One way of looking at it is thinking the economy is a body and finance is the heart, and it is pumping money all the time into the economy.
What defines finance is the management of money. These things would include activities like lending, borrowing, investing, saving and budgeting. Furthermore, expanding on these words could mean any of the following.
· Lending – this could mean lending money to someone who is looking to buy a house, car or any other expensive asset
· Saving – holding a relatively big proportion of your money in the bank on a savings account
· Borrowing – called lending in some scenarios, but it is more commonly used as a term for borrowing from financial institutions like banks.
· Budgeting – this is used when one person wants to keep to a price limit when it comes to buying things, like sticking to a weekly budget on food of US$200
The technical definition of economics is the production, distribution and consumption of goods and services. Economics is the process of how individuals, the government, businesses within the nation allocate resources to one another to satisfy the needs of every party.
There are two types of economics called Microeconomics and Macroeconomics:
· Microeconomics goes into the behaviour of an individual consumer and producer
· Macroeconomics is the overall behaviour of regions and nations on a global scale
As described above, they are two different things, but both heavily rely on one another to fuel our economy and world. This information is very broad and circular. If some key part of the financial system goes wrong, that could create opportunities or a disaster like a recession. There are many news sources where you can rely on for the best information.
A News Source for Our Financial and Economic World
One website which provides you with information daily in the financial and economic sector is a website called Wealth Morning.
Wealth Morning is a news website in the financial sector. They cover the majority of the aspects of finance. They have articles which also talk about the economy, cryptocurrencies and other financial-related topics.
The information that you can gain out of this could be an insight into what direction the economy is heading, the factors involved, and how you can make the most of it.
Wealth Morning also has a product where they can provide you with premium research. This research provides you with insights on the stocks with the potential to secure your wealth.
Wealth Morning also takes into consideration how you can choose the right stocks to buy. They analyse all the big events going on in the world right now, like the trade war between China and the United States, as well as Brexit coming to a final decision.
These events are taking some stocks through a rollercoaster ride, while some stocks are steadily increasing all the way through.