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In past outbreaks many overreacted, reining in their travelling and spending, causing serious economic damage.
The unemployed reduce their consumer spending, causing further cuts in aggregate demand, which throws yet more people out of work.
In response, consumers sharply reined in their spending, causing overall economic growth to slow to a 3percentt annual rate in the April-through-June period.
Phelps is also fearful some European and Middle Eastern investors could grow weary of financing our government spending, causing prices to tank and yields to shoot up.
The paper's Q&A explains why the current situation "could be good for Britain" despite economists more usually fearing that falling prices will deter consumers and firms from spending, causing a "deflationary spiral".
As revenue has slowed or shrunk in the face of weak demand and rising inventories, companies have sought to boost their long-term competitiveness by cutting operating costs, particularly wage bills, and cutting back on spending, causing their suppliers to do the same, thus setting up a vicious spiral or redundancies.
Similar(52)
"Government spending causes volunteering," the economist Richard Steinberg explains.
First, the idea that Labour's spending caused the recession.
The increase "was largely due to extra spending caused by the surge in gasoline prices".
And still the mainstream media peddles the Tory lies that a failure to control spending caused the deficit to explode.
He said his company faced hesitant corporate spending, caused in part by worries about Europe's economic slowdown.
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