What were the main causes of the 2001 recession, you might ask? First, let’s focus on the here and now. Anyone with access to the media in any way is likely to have had their curiosity piqued by the latest talk of the recession. We’re definitely falling into one, and it looks serious. Unbridled capitalism and consumer spending has finally caught up with us and now we are paying our 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 two decades. It has been said that we must learn from the past so as not to make the same mistakes again in the future. The most recent past recession that comes to mind was the one that occurred in the early stages of this decade. What were the main causes of the 2001 recession?
The most obvious problem was the collapse of the dotcom bubble. Basically, too many companies entered internet marketing with their eyes and judgment clouded by dollar signs. They saw the Internet as a kind of “money multiplier” machine where you basically put $2.00 into it to win $200.00. They became lazier and less creative with their marketing efforts. This entire philosophy turned out to be wrong for the most part, and online consumer spending began to prove it. Eventually, a large number of these generic companies went bankrupt.
This dot-com crash triggered a crash on the NASDAQ. The Dow Jones remained relatively unscathed by the NASDAQ crash until September 11, 2001, when the terrorist attacks occurred. In the months that followed, the market rallied and crashed repeatedly. It eventually collapsed hard in the last quarters of 2002, causing a recession.
Some economists dispute whether or not this period of economic slack should be labeled a recession due to the fact that it did not last for two full consecutive cycles. However, it still had a strong impact on the American people. When we discuss the main causes of the 2001 recession, we are definitely forced to consider the relevance of our current dire economic situation.