What Were the Major Causes of the 2001 Recession?

What were the major causes of the 2001 recession you might ask? First, let’s focus on the here and now. Anyone with access to media of any form has now likely had their curiosity aroused by the latest recession talks. We are most definitely falling into one, and it looks serious. Unrestrained capitalism and consumer spending has finally caught up with us and we are now paying the dues. What goes up must come down, and this is exactly what is happening with the extraordinary economic growth we have seen in the last couple decades. It has been said that we must learn from the past to avoid making the same mistakes again in the future. The previous, most recent recession that comes to mind was that which occurred in the earlier stages of this decade. What were the major causes of the 2001 recession?

The most glaring issue was the the collapse of the Dot-com bubble. Basically, too many companies entered into internet marketing with their eyes and judgment clouded by dollar signs. They viewed the internet as a sort of “money-multiplying” machine that you basically put $2.00 into in order to make $200.00. They got lazier and less creative with their marketing efforts. This whole philosophy turned out to be incorrect for the most part, and consumer spending online began to demonstrate this. Eventually, large numbers of these generic companies went bankrupt.

This Dot-com collapse triggered a collapse in the NASDAQ. The Dow Jones remained relatively unscathed by the NASDAQ collapse until September 11, 2001, when the terrorist attacks occurred. In the following months, the market rebounded and collapsed repeatedly. It eventually crashed hard in the final quarters of 2002, causing a recession.

Some economists argue whether or not to even label this period of poor economic activity as a recession because of the fact that it did not last a full two consecutive cycles. Nonetheless, it still had a hard-felt impact on the American people. When discussing the major causes of the 2001 recession we are definitely obligated to consider the relevance to our current dire economic situation.

Filed under: general Tagged with: , , . - permalink.