Recession
You’ve heard the word before but what exactly is a recession? This article will look at recessions, their common causes and the effects they can have on economies and a country's residents. We will also take a look at some of the ways economists can predict that a recession is on the way. Firstly, let's take a look at what a recession really is. A slowing down of a country's economy is termed a recession. This can be felt in the form of a weak stock market, rising levels of unemployment and often lower levels of productivity. It can also manifest itself through fewer increases in salaries and wages for working people. From an economist's viewpoint, times of recession lead to lower investments and shaky confidence in the business market. But from an individual's viewpoint, a recession can have a major impact on nearly every aspect of day to day life.
Imagine your country in the middle of recession. Perhaps a friend or relative has been laid off from work due to their employer's inability to pay regular wages? Cost cutting is one of the first signs of recession and one of the ways employers try to combat the effects of a recession is by decreasing the amount of workers they employ. The prices of common goods and services will also rise due to increasing costs of production. Confidence in the stock market and in other areas of investment may be low, meaning that less people will purchase property, stocks and bonds, and most types of consumer goods. These are all common symptoms of a recession.
Yet who decides when an economy is in recession? Most economists agree that a slowing down of an economy needs to continue for a minimum period of six months to constitute a recession. Most people also agree that for a recession to be in effect, the Gross Domestic Product (GDP) of a country needs to decrease.
A recession may last for six months or up to two years, after which time the economy usually shows some sign of improvement. This is due to the policies governments must implement to bring countries out of recession.
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Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
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