Economic Recession - History, Attributes, Predictors & Answers

Ok so there's no doubt about it, over the last few years we have been in the depths of a phenomenon that rears it's ugly head only rarely, but with devastating effect; the economic recession. Both big and small corporate companies and the common man have all come face to face with the effects of the credit crunch. But history has shown that in times like these there are opportunities to be had and this time is no different. This article gives you an insight into the history of such a recession in the United States.

According to the economy experts, there have been around 32 precise cycles of expansion and contraction in the history of US recession which dates back to 1854. Keeping this figure in mind, it can be concluded that there have been around 32 economic recessions in about a period of over 150 years, quite a lot when you think about it!

Further examining these 35 cycles of expansion and contraction, it can be noted that there have been approximate 38 months of expansion that has been followed by nearly 17 months of contraction. It can be concluded therefore, that economic recessions in recent times have been fewer in number and comparatively much shorter than in the past. Here is a detailed analysis on the different periods of economic recession in United States over a period of 150 years.

January 1980 to July 1980 (6 months)
July 1981 to November 1982 (16 months)
July 1990 to March 1991 (8 months)
March 2001 to November 2001 (8 months)
December 2007 to current

A nation's economy is dependent upon the production and consumption of goods and services. Thus, both the production and consumption are interlinked and they affect the economy of a country on the whole. When an economic recession sets in, it creates a disturbance in the proper balance between production and consumption.

Several economists have tried to explain and define economic recession based on their theories. One thing that is common in the all the definitions is the 'decline' - decline in GDP, employment, investment, and stock market, which leads to the breakdown of the economy. An economic recession is usually involved with falling prices (deflation), or otherwise rise in prices (inflation). This leads to an economic collapse.

The common man suffers due to increased layoffs in the workplace, fewer job opportunities in any given market, and a rise in the price of oil for example. It is for this reason that many are looking at self employment as a means to beat the recession and many are succeeding. You could too!

Attributes of an economic recession:

An economic recession has several attributes which can concurrently occur. These include a sharp decline in employment, a fall in investments and a resultant fall in the business profits of a country.

A severe downfall in the GDP of a country, accounting for to up to 10%, is referred to as an economic recession.

Predictors of an economic recession:

There are no exact and perfect predictors of an economic recession. Economists rely on possible predictors to foresee the onset of a recession and warn people about it.

So what are these 'predictors'? Well, in the United States, past recessions have often been preceded by a considerable setback in the stock market. However, about 50% of cases demonstrated a decline in the stock market only after the recession had set in. Economists have come up with different models to predict the effects of a recession but the truth is none of these models are accurate.

But just because we can't accurately predict the onset of a recession does not mean we must suffer when the next one hits. So if you want to discover a business that is unaffected by the global economy then look no further.


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