A recession is when the economy experiences a decline in economic activity. This means that the country's overall production of goods and services decreases. It is typically identified by a significant drop in GDP (Gross Domestic Product), which is the total value of all goods and services produced within a country during a specific period.
Key characteristics of a recession include:
1. High unemployment rates: During a recession, many people lose their jobs as businesses reduce their workforce due to lower demand for goods and services.
2. Decrease in consumer spending: Consumers tend to spend less during a recession due to economic uncertainty, leading to a slowdown in economic activity.
3. Contraction in business investment: Companies may cut back on investments in new projects or expansions during a recession, impacting economic growth.
4. Decline in industrial production: As demand for goods decreases, industrial production and manufacturing activities often slow down.
In summary, a recession is not decreed by the Federal Reserve Bank, a Presidential order, or identified solely by negative GDP for two consecutive quarters. It is a complex economic phenomenon characterized by a broad decline in economic indicators beyond just GDP.
