Recession

In economics, a recession is a business cycle contraction, a general slowdown in economic activity.[1][2] During recessions, many macroeconomic indicators vary in a similar way. Production, as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation all fall during recessions, while bankruptcies and the unemployment rate rise.Recessions generally occur when there is a widespread drop in spending often following an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.
What Does Recession Mean?
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. On Jan. 21, 2008, stock prices tumbled around the world. Most analysts pointed to fears surrounding the United States economy and a possible recession as the reason for the drop. Ironically, economic conditions in the United States were affecting the world economy on a day when its own markets weren't even in session -- they were closed for the Martin Luther King Jr. Day holiday. Three days later, news outlets were already reporting a new economic stimulus package, designed in part to try to prevent a recession.This isn't the first recession news in recent memory. On Nov. 26, 2001, the news media announced the United States was officially in a recession and had been since March of that year. To most Americans, this wasn't all that surprising: Rising unemployment and a weak stock market had been in the news for months.Both the 2008 market drop and the 2001 news blitz raised a lot of questions. Who decides when the economy is in recession, and on what grounds? What actually constitutes a recession, anyway? When a nation's economy enters a recession, is life guaranteed to get harder for most of its citizens? And how often does a recession lead to a depression?In this article, we'll find out what recessions are, see why they occur and examine the criteria economists use to identify them. We'll also look at the effects of recession as well as explore some of the ways a country can turn the economy around again.
Recession Measures;In economics, a recession is a business cycle contraction, a general slowdown in economic activity.During recessions, many macroeconomic indicators vary in a similar way. Production, as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation all fall during recessions, while bankruptcies and the unemployment rate rise.Recessions generally occur when there is a widespread drop in spending often following an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.This graph is for real GDP through Q2 2011 and shows real GDP is still 0.4% below the previous pre-recession peak.At the worst point, real GDP was off 5.1% from the 2007 peak.And real GDP has performed better than other indicators ..
This graph shows real personal income less transfer payments as a percent of the previous peak.With the revisions, this measure was off almost 11% at the trough - a significant downward revision and shows the recession was much worse than originally thought.
Real personal income less transfer payments is still 5.1% below the previous peak.
It will be some time before this indicator returns to pre-recession levels
This graph is for industrial production through June.Industrial production had been one of the stronger performing sectors because of inventory restocking and some growth in exports.
However industrial production is still 7.6% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.
Employment The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.On the timing of the trough of the recession, GDP and industrial production would suggest the end of Q2 2009 (and June 2009). The other two indicators would suggest later troughs.And of course the recovery in all indicators has been very sluggish compared to recent recessions
This graph is for real GDP through Q2 2011 and shows real GDP is still 0.4% below the previous pre-recession peak.At the worst point, real GDP was off 5.1% from the 2007 peak.And real GDP has performed better than other indicators ..
This graph shows real personal income less transfer payments as a percent of the previous peak.With the revisions, this measure was off almost 11% at the trough - a significant downward revision and shows the recession was much worse than originally thought.
Real personal income less transfer payments is still 5.1% below the previous peak.
It will be some time before this indicator returns to pre-recession levels
This graph is for industrial production through June.Industrial production had been one of the stronger performing sectors because of inventory restocking and some growth in exports.
However industrial production is still 7.6% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.Employment The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.On the timing of the trough of the recession, GDP and industrial production would suggest the end of Q2 2009 (and June 2009). The other two indicators would suggest later troughs.And of course the recovery in all indicators has been very sluggish compared to recent recessions.