The economic state of the country and consumer confidence can help the growth and development or harm it. “In recessionary times, consumers begin limiting their purchases to the essentials, foregoing luxury or big-ticket items. Companies also scale back production, hiring and the development of new products and services to ensure that their finances can weather the storm. In periods of overall economic growth, these companies once again expand”. (Mohr, 2014) The opposite is true in businesses that deal in basic goods that everyone needs regardless of what the economy is. Some prime examples are groceries, diapers, and basic staple goods.
Interest rates are a common deciding factor when buying a house, car, or even a business looking to expand or refinance. Interest rates can impact the growth of an industry in several different ways. In big companies such as vehicle manufacturers, an increase in the interest rates can prevent some customers from borrowing the money to finance the purchase of their vehicles. High interest rates also deter companies from investing in new capital and expanding their business. A day hardly goes by that we don’t hear something on the news about the economy. I believe we are still in a recession. Yes things are starting to improve, but if you look around, there are still fewer jobs are being created and more people are losing their current jobs. So how did we get here and how can we get out? Factories and industries are not producing as many goods as they were in previous months. The banks are lending less money to customers, which leads to difficulty in getting loans for homes and vehicles. This also hurts the car manufacturers and home builders. As other businesses begin to feel the crunch, the GDP declines, and the growth of the economy slows. I think our economy will