What Happens During a Recession - Find Out the Truth!
By now, unless you're living in a shack in a remote part of the planet, with zero communication with the outside world, you know that there is a recession going on.
Yup, the credit crunch and a host of other factors have led the globe down the slippery slope to what we call recession.
But while we all know that that's a bad thing, the exact definition eludes most of us - unless, of course, we work in finance or business! Answering the question of what happens during a recession, and pinning down exactly what a recession is, can help demystify it a little, and take some of the apprehension out of things! A Simple Matter of GDP All complicated definitions of recession aside, the answer to what happens during a recession is quite simple: when the GDP (Gross Domestic Product) of a country falls by less than 10%, and stays down for more than one consecutive quarter, you have a recession.
So, when people and governments start spending less, and keep it up, we find ourselves in recession.
Recession vs Depression While they may sound similar, a recession and a depression are different.
For one thing, a recession is milder.
Then there's the fact that while a recession is a slowdown in growth, a depression is more of a reversal, with economies actually shrinking, instead of growing or stabilizing.
Let's hope we don't see another one of those for a long, long time! Effects of Recession Of course, looking at the question of what happens during a recession purely from a government and economic point of view ignores the true victims of a recession.
Yes.
Economies will recover, just like they did when the dot com bubble burst.
Yes, there will be companies that weather the storm.
However, with layoffs and corporate downsizing on the rise, there are families out there that have no income, and who might struggle for years to regain their financial security, if, indeed, they ever do.
Coming Back Critical to the idea of what really happens in a recession is figuring out how we as a global economy come back.
How does the world restabilize, and start creeping back to economic stability? Well, it stands to reason that because a downturn in the economy, that leads to a recession, is linked to pricing and spending, those two factors are also what need to be addressed to bring us all back to prosperity.
Investors need to start taking risks again.
Corporations need to rethink pricing structures to bring their products and services back to what the market can bear, and people need to start spending again.
Of course, since this also means that the jobless need to find new employment, gaps left by companies that folded, and all the other secondary effects of the recession, need to be addressed too.
Which is why recovering from a recession, even a mild one, can take years, or even decades.
Yup, the credit crunch and a host of other factors have led the globe down the slippery slope to what we call recession.
But while we all know that that's a bad thing, the exact definition eludes most of us - unless, of course, we work in finance or business! Answering the question of what happens during a recession, and pinning down exactly what a recession is, can help demystify it a little, and take some of the apprehension out of things! A Simple Matter of GDP All complicated definitions of recession aside, the answer to what happens during a recession is quite simple: when the GDP (Gross Domestic Product) of a country falls by less than 10%, and stays down for more than one consecutive quarter, you have a recession.
So, when people and governments start spending less, and keep it up, we find ourselves in recession.
Recession vs Depression While they may sound similar, a recession and a depression are different.
For one thing, a recession is milder.
Then there's the fact that while a recession is a slowdown in growth, a depression is more of a reversal, with economies actually shrinking, instead of growing or stabilizing.
Let's hope we don't see another one of those for a long, long time! Effects of Recession Of course, looking at the question of what happens during a recession purely from a government and economic point of view ignores the true victims of a recession.
Yes.
Economies will recover, just like they did when the dot com bubble burst.
Yes, there will be companies that weather the storm.
However, with layoffs and corporate downsizing on the rise, there are families out there that have no income, and who might struggle for years to regain their financial security, if, indeed, they ever do.
Coming Back Critical to the idea of what really happens in a recession is figuring out how we as a global economy come back.
How does the world restabilize, and start creeping back to economic stability? Well, it stands to reason that because a downturn in the economy, that leads to a recession, is linked to pricing and spending, those two factors are also what need to be addressed to bring us all back to prosperity.
Investors need to start taking risks again.
Corporations need to rethink pricing structures to bring their products and services back to what the market can bear, and people need to start spending again.
Of course, since this also means that the jobless need to find new employment, gaps left by companies that folded, and all the other secondary effects of the recession, need to be addressed too.
Which is why recovering from a recession, even a mild one, can take years, or even decades.