Difference between revisions of "Recession"
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| − | A '''recession''' | + | A '''recession''' is defined as two quarters (6 months) of negative [[economic growth]].<ref>[https://money.cnn.com/2008/03/06/pf/minds_over_money.moneymag/index.htm?postversion=2008031312 Money magazine]</ref> The economy ceases to expand, bringing in new workers and increased output, and begins contracting, laying off workers and declining output. [[Unemployment]] increases; output and profits fall; personal income falls. |
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| + | A recession ends when positive growth is restored. | ||
Broader definitions of an economic recession are often used. Investopedia defines an economic recession: "A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession."<ref>[http://www.investopedia.com/terms/r/recession.asp Recession]</ref> | Broader definitions of an economic recession are often used. Investopedia defines an economic recession: "A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession."<ref>[http://www.investopedia.com/terms/r/recession.asp Recession]</ref> | ||
Latest revision as of 12:41, December 13, 2018
A recession is defined as two quarters (6 months) of negative economic growth.[1] The economy ceases to expand, bringing in new workers and increased output, and begins contracting, laying off workers and declining output. Unemployment increases; output and profits fall; personal income falls.
A recession ends when positive growth is restored.
Broader definitions of an economic recession are often used. Investopedia defines an economic recession: "A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession."[2]
There may also be a decline in personal and business optimism, and a decline in the rate of consumption and capital investment in business activity.
Recessions are defined using a number of advanced indicators by the National Bureau of Economic Research, a private think tank that includes both conservative and liberal economists.[3]
As a rough rule of thumb, a recession is underway when there is a decline in gross domestic product (GDP) for two consecutive quarters.
Contents
Remedies
Several strategies exist for dealing with recession:
- Keynesian economics indicate deficit spending by government will deal with any short term losses by business.
- Supply-side economics indicate government tax cuts will promote business capital investment.
- laissez-faire economics recommend the government do nothing and not interfere with market forces.
See also
- Recession of 2008
- Bank run
- Financial Crisis of 2008
- Great Depression
- Panic of 1837
- Panic of 1893
- Panic of 1907
External links
- US Business Cycle Expansions and Contractions, official NBER dates
