What will trigger a recession?

What causes a recession?

According to the American research organization "National Bureau of Economic Research" (NBER), a recession is a "significant decline in economic activity within the entire economy that lasts for more than a few months.

Indicators are the gross domestic product (GDP), real income, the employment rate, industrial production as well as the sales figures of the wholesale and retail trade. "

In addition, there is a recession when businesses can no longer expand, GDP falls for two consecutive quarters, unemployment rises and house prices fall.

There are many reasons that contribute to inflation. The main reason, however, is inflation.

Inflation represents a general increase in the prices of goods and services over a certain period of time: The higher the inflation rate, the less can be bought for the same price.

Reasons for inflation are, for example, increased production costs, higher energy costs or national debt.

During inflation, people tend to spend less on leisure, generally spend less and save less. However, it is precisely this cut in spending by private individuals and companies that is causing GDP to fall further.

In this context, the unemployment rate is also rising as companies lay off workers as a further measure in order to reduce costs.

This combination of falling GDP and rising unemployment is known as a recession.

Everything is waiting for the FED! After that, the market can tilt. Most prices run up in the 24 hours before the FED meeting and then they sell off because the FED did not deliver what the market wanted. > read more


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