What is Recession?
Before understanding “RECESSION”, we need to understand the market economy; * A) TWO STAGES OF MARKET ECONOMY * B) TWO FACTORS OF MARKET - DEMAND AND SUPPLY
A) TWO STAGES OF MARKET ECONOMY
A1) GROWING MARKET ECONOMY
A2) DECLINING MARKET ECONOMY
C) WHAT is Recession?
Recession is the economy shrinking for two consecutive quarters (=6 months) with a decrease in the GDP (=Gross Domestic Product)
GDP = MONEY VALUE OF {C + I + G + (X – M)}
C = consumption, I = Gross Investment, G = Government Spending, X = Exports, M = Imports
GDP is a good Indicator of economy; other indicators could be; i. Unemployment Rate ii. Consumption Rate iii. Actual Personal Income & etc.
If GDP is growing, then market is growing due to increase in demand;
NOTE : If the recession continues for next quarter, (>6 months) then we go through “DEPRESSION” ECONOMY;
There is a joke that economist quote to explain the Different between ‘Recession & Depression”
Recession = when your neighbour loses his job Depression = when you lose your job
E) Why Recession happens? E1) Over Production E2) Low Confidence Level
So you can see hit on airline and Hotel industries can affect “UN-related” industries in the end. One industry can hit many other industries when the confidence level of millions of consumers & producers drastically comes down.
F) How to know recession?
Indicators to say a nation is in recession;
