Understanding Recession
A recession refers to a significant decline in economic activities that lasts for a prolonged period. It is characterized by a decrease in GDP, increase in unemployment rates, and reduction in consumer spending.
Causes of Recession
Recessions can be triggered by various factors such as financial crises, inflation, natural disasters, and political instability. For example, the 2008 financial crisis was a major cause of the Great Recession.
Impact of Recession
During a recession, businesses may cut back on production, leading to layoffs and higher unemployment rates. Consumers tend to spend less, causing a decrease in demand for goods and services. This can result in a downward economic spiral.
Examples of Recession
- Great Recession of 2008
- Dot-com Bubble Burst of 2001
- Oil Crisis of the 1970s
Case Study: Great Recession
The Great Recession of 2008 was a global economic downturn caused by the subprime mortgage crisis in the United States. It led to a collapse of financial institutions, high unemployment rates, and a severe housing market downturn.
Statistics
According to the National Bureau of Economic Research, the Great Recession lasted from December 2007 to June 2009, making it the longest recession since World War II. It resulted in a loss of trillions of dollars in wealth and a slow recovery process.
