Economic indicators definition

Economic indicators definition

This article is about a slowdown in economic activity. In economics, a recession is a business cycle contraction economic indicators definition results in a general slowdown in economic activity. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble.

In a 1974 The New York Times article, Commissioner of the Bureau of Labor Statistics Julius Shiskin suggested several rules of thumb for defining a recession, one of which was two down consecutive quarters of GDP. In time, the other rules of thumb were forgotten. Some economists prefer a definition of a 1. In the United Kingdom, recessions are generally defined as two consecutive quarters of negative economic growth, as measured by the seasonal adjusted quarter-on-quarter figures for real GDP.

These summary measures reflect underlying drivers such as employment levels and skills, household savings rates, corporate investment decisions, interest rates, demographics, and government policies. Koo wrote that under ideal conditions, a country’s economy should have the household sector as net savers and the corporate sector as net borrowers, with the government budget nearly balanced and net exports near zero. The type and shape of recessions are distinctive. 99 can be described as L-shaped.

Recessions have psychological and confidence aspects. For example, if companies expect economic activity to slow, they may reduce employment levels and save money rather than invest. Such expectations can create a self-reinforcing downward cycle, bringing about or worsening a recession. Consumer confidence is one measure used to evaluate economic sentiment. High levels of indebtedness or the bursting of a real estate or financial asset price bubble can cause what is called a “balance sheet recession.

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