Accounting 12 - The Ultra Blog

Link:
http://money.cnn.com/2009/04/03/news/economy/jobs_march/index.htm?postversion=2009040318

Summary:
Recession or depression? As we look at the U.S and the world's economy, what are we currently in? Unemployment is now at a 25 year high, employers have trimmed 663,000 jobs from their payrolls last month, 5.1 million jobs have been lost since the start of 2008, and the economy shows little signs of improvement. Of the 663,000 jobs lost last month, many of the layoffs have yet been implemented, which means even more jobs are lost than it is said to be. The unemployment rate has climbed from 8.1% to 8.5% in February. Ever since 2008, when the recession began, more than half of the jobs lost have been in the past five months. The manufacturing industry has lost 161,000 jobs, the construction industry has lost 126,000 jobs, and the professional & business services industry has lost 133,000 jobs in March alone. The only areas of increase have been in education and health care, and they have only added a modest 8000 jobs in the month. In conclusion, the typical length of time people are out of work now stands at an average of 20 weeks, and the average hourly work week has now dropped to 33 hours, which means we have a lot of work to do before we are out of this recession.

Connections:
Many connections were made between the article and accounting in general. To start things off, the main goal of all companies are to get the maximum amount of profit. All the industries and companies laid off their employees because they had to. They were not making enough profit to sustain their company and still prosper. If the companies did not cut down on their expenses (ie. wages) they would go bankrupt eventually. Linking the lay off of employees to the accounting I've learned in the textbook, the process is not that simple. It includes procedures regarding the 'registered retirement savings plan', of which some people might consider as a backup plan if they start running low on money because they do not have a job, the Canada pension plan, and unemployment insurance, for when they are unemployed. The next connection I made was about wages - payments to workers for their work, on an hourly basis. The average hourly work week is now 33 hours and that is not a good sign for the economy. That means the gross pay for employees drop because the average or normal was about 40 hours a week before. Another connection I made that doesn't directly relate to the article but still can, is regarding the issue of interest and loan rates. If the banks just reduced their rates, companies would be able to pay off their debts and loans, therefore making the company more successful. In doing this, companies would have a higher current ratio and a higher quick ratio (a lot more assets than liabilities), and this would mean companies would not have to lay off as many employees. During this recession, there are many steps to be taken before we can finally get ourselves out of it (which lies in the hands of Obama really...), and just like accounting, we must follow those steps and procedures to get the job done!

Reflection:
University and college graduates. The article has a side link regarding those graduates, and how it will affect them more than the people currently working. How are they going to get a steady job that will support themselves, let alone maybe their own families? Some say that the recession or depression will end by 2013, but there are books that predict that we will have another recession starting in 2013 because of the retiring work force. As of the current problem we have now, I believe that we should freeze the work hours and wages, and hope to ride out the recession. I would love to say, "The government should help out by stimulating the economy", but it would be unrealistic as they themselves are in debt as well. It seems as though there are no solutions to the problem that we have gotten, or the U.S has gotten us into. Of all countries, Canada is not as affected because of their banking system, which is great, but the news of the recession just shows us how bad the economy really is. So I would like to ask the potential readers of this blog, what do you think it will take for us to get out of this problem we have? And how soon do you think we can resolve this problem?