RECESSION
ABOUT RECESSION
In economics,
a downward trend in the business cycle characterized by a decrease in
production and employment, which causes a decrease in household income and
spending. Even if not all households and businesses experience actual income
declines, their future expectations become less certain during a recession,
causing them to postpone large purchases or investments.
In
recessions, the decline in output can be traced to a decrease in consumer
purchases of durable household goods and business purchases of machinery and
equipment, as well as a decrease in additions of goods to stocks or
inventories. The greatest impact is likely to be on inventory; businesses will
stop adding to their inventories and will be more willing to draw on them to
fill production orders.
Inventory
reductions have a double effect on production volume. A number of factors
influence whether a recession turns into a severe and prolonged depression. The
extent and quality of credit extended during the previous period of prosperity,
the amount of speculation permitted, the ability of monetary and fiscal policy
to reverse the downward trend, and the amount of excess productive capacity in
existence are among them.
if not
already in one - only two years after the pandemic recession ended.
A recession is traditionally defined as six
months of contraction. However, nothing is easy in the post-pandemic economy.
Its trajectory has perplexed Federal Reserve policymakers and many private economists
since growth stalled in March 2020 due to COVID-19, which forced 20 million
Americans out of work.
The job
market is one sector of the economy that has remained defiantly buoyant. The
Labour Department reported on Friday that America's hiring boom continued in
July, with employers adding a surprising 528,000 jobs despite raging inflation
and rising fears of a recession. The number of people hired in July increased
from 398,000 in June.
Even though
the economy shrank in the first half of this year, employers added 2.7 million
jobs, more than in most years prior to the pandemic. And the unemployment rate
has fallen to 3.5%, approaching a half-century low. Strong hiring and extremely
low unemployment are incompatible with a recession.
Submitted
by
Sk. Mastan vali
PGDM-A
30-004
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