Federal Government and Recession, Essay Example

The first scenario presents a situation that increases uncertainty within the employees. Contracts with short-term durations provide little security and stability to the employee. Therefore, employees may seek alternative employment, which can drastically increase turnover within the company.  This is not a good scenario for any organization that is seeking to fight the consequences of the ensuing recession.  By increasing contract duration time periods, the employees will feel more secure in their position and will also be more apt to negotiate for more pay over a longer period of time, which will help decrease the more immediate wage costs.

The second scenario presents the Federal government and all federal organizations with the added troubles of easing the mind-set of the American public.  Currently, the view is that the government is less determined to reduce inflation.  This presents the public with the added negative viewpoint that the government provides little to no support to end the unemployment issues by creating more jobs and helping solve many of the negative issues from the current recession.  These issues will make the recession more severe because the people are less likely to buy in to governmental opinions, policies and projections for the future.  People are now more apt to engage in self-directed activities instead of those suggested by the government.  The recession will only continue to worsen as a result of decreased consumer spending, corporate and small-business layoffs, and a soaring unemployment rate.

The expectations of inflation should adjust to the actual inflation changes.  These expectations help provide people and organizations with the ability to predict potential patterns in fiscal and economic behaviors.  The recession will become less severe as a result because the expectations are directly related to the actual changes in inflation. Otherwise, expectations of inflation are not based on factual evidence and are based more on opinions and presuppositions. These errors in expectations can cause great personal and organizational harm and make actual economic activities less beneficial in the short-term and long-term.  The recession would be much worse if these expectations did not adjust according to actual changes in inflation.