Define Recession

A Recession is a period of negative economic growth for two consecutive quarters. This means there is a fall in National Output and National Income. Inevitably a recession will involve higher unemployment and an increase in government borrowing.

Some define recession as a period of rising spare capacity and rising unemployment. It is possible to have a ‘growth recession’ i.e. very low growth of 0.5% and people feel they are in a recession.

• Recessions
• Effects of Recession on Businesss

Readers Question: What economic variables that can be affected positively by the economic slowdown.

1. Increased Productivity because firms have incentives to cut costs.
2. Lower inflation. Recession leads to fall in inflation and this can enable stronger growth in the long term.
3. Inefficient firms forced out of business (although this is a bit suspect.)

• Who Benefits from a Recession
• Does Anyone Benefit from A Recession
• Can A Recession be a good thing?