Economic Recession

Economic recession can last a short period of time as in a few months or it can span a period of years. It is considered a financial meltdown. The affects can be regional or over the world economy. This ultimately leads to unemployment issues, stock market crashes, financial crisis, and economic depression. The longer a recession lasts the further it heads into a state of depression. There are many causes of an economic recession that must be reviewed such as credit crunch, subprime mortgage crisis, stock market crashes, and varying degrees of a recession cycle.

The GDP or Gross Domestic Product is how a recession is measured. In general, it is a reduction of business activity for a certain amount of time. A decline in GDP for two consecutive quarters or a contraction in business cycles is how it can be defined.

According to the National Bureau of Economic Statistics (NBER) offers the following description: Recessions occur when there is a decline significantly in the economic activities and they spread thru the economy, lasting more than a couple of month and is visible in real income, industrial production, wholesale sales, and employment in the GDP. This condition shows signs of reduced output, increases in the unemployment rates, corporate profits dropping, and bankruptcy rates increasing. In history the worst recession lasted a period of sixty years in the US and it began in November of 1973 and stopped in March of 1975. It was during this time that the GDP fell by a margin of 4.9 percent.

The effects on the financial markets and the economy are more or less the same regardless of the reason for the economic downfall that results in a recession or depression. Shrinking outputs, abnormal increases in unemployment are some of the worse effects this type of slowdown has to offer. Financial crisis, increasing bankruptcies, and lowered amounts of commerce and trade are also results of these occurrences. When the high volatile currency rates are increased and fluctuations in the devaluations of money, and deflation of prices will serve to accentuate this type of financial crisis. These two conditions in the market have wide spread effects such as lowered consumer confidence, disruption in retirement planning, and stock prices falling. These are common negative aspects.

There are major firms all over the world that have resorted to cutting costs where an economic recession has created job loss among individuals. You have to analyze what is happening in a recession and to measure the indirect or direct effects.

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