What is an Economic Recession

What is an economic recession? This occurs when there is a significant decline in the economy which usually lasts for months. This is visible in terms of consumer spending, employment, industrial production, real income and wholesale trade. A technical indicator of this is 2 consecutive quarters of negative growth which is measured by the countryís GDP or gross domestic product.

Experts say that an economic recession is normal because it is part of the business cycle and things usually improve within 16 to 18 months.

During the business cycle, there is a period of recovery, expansion, slowdown and then recession. During recovery, the GDP of a country starts to move up. When the GDP grows robustly, this is the time that it expands. When consumers are not buying that much, this is when you have a slowdown. Because there is weaker demand, you have a recession.

The last economic recession occurred in 2000 and 2001 which featured three quarters of negative growth followed by three positive quarters then five more quarters of sub par growth. Experts say that the same trend will happen right now.

One solution that the government usually does is lower interest rates to help stimulate the economy. Just last year, the Federal government slashed interest rates three times towards the end of the third and fourth quarter year so that overnight loans between banks could be borrowed at 4.25% which happens to be its lowest in the past 2 years.

What makes the economic recession different from what occurred after the Second World War is that this one is caused by falling home values and a crisis of confidence among fixed income investors.

Despite the fact that the country has endured this time and again for over 50 years, there is still no way to predict when it will happen.

Some use the stock market as an indicator. Others use the inverted yield curve which uses yields on a 10 year and three month Treasury securities and the Fedís overnight fundís rate. The unemployment rate is also another which happens to be one of the things that make up the index of leading indicators.

There are people in the Bush administration who do want to call it an economic recession because this will make people panic but there are others who are brave enough to admit that it is here. Since it is going to be some time before the economy recovers again, everyone is advised to stay calm, save up and look for long term investments worth going into.

Apart from the war in Iraq, the economy is going to be one of the critical issues that both candidates have to address as they are campaigning for the highest post in the land. Whoever wins, they have to find a way to reduce the unemployment rate, help people save their homes and a lot of other things that affect the average American household.

An economic recession lasts months at a time. If it should continue for a much longer period, then this is called a depression which is something that the world and not only the US experienced at the end of the First World War. This lasted for up to 4 years that many hope will never happen again.


Website URL:
Title / Subject:
Hide my email


My Articles

Teaching Your Kids To Save During Recession
Young And Jobless: The Effects Of Economic Recession On The Youth
Economic Recession And How To Deal With It
How Can Your Business Survive An Economic Recession
Economic Recession And What It Can Do To You
How To Save In Times Of Economic Recession
How To Survive The Economic Recession
What Is An Economic Recession
Far-Reaching Economic Recession
Economic Recession: What You Should Do To Prevail
Road Sign Ahead: Signs Of Economic Recession
On The Dole: The Effects Of Economic Recession On Employment
Economic Recessions Are Normal
How To Survive In An Economic Recession
Collateral Damage: Suicide And Economic Recession
Redundant Women: The Effects Of Economic Recession On Women
Behind The Hitch: The Causes Of Economic Recession
How Can You Survive During An Economic Recession
What Economic Recession Is All About
Economic Recession, Tips To Deal With It
Economic Recession: A Wake Up Call
Defining An Economic Recession
The History Of The American Economic Recession
What To Watch Out For During Economic Recession

   Related Sites

My Articles

What Is An Economic Recession What is an economic recession? This occurs when there is a significant decline..

Collateral Damage: Suicide And Economic Recession Economic recession and depressions are well known to..

Defining An Economic Recession The United States has been experiencing economic..

Related Products:

Related News:

No item elements found in rss feed.