subject: What Is A Recession? Its 3 Signs And How To Protect Your Money [print this page] A Time of Hardship A Time of Hardship
What is a recession? Though some of us may have difficulty when they try to define recession, by now, we all are familiar with its most common effects. In a time like this, we need to learn to foresee, spot, and safeguard ourselves from financial disaster. The more we know about its signs and symptoms, the better we can learn to protect ourselves. To find out more about our current economic recession, read on.
What Is a Recession?
How do we go about defining our current global recession? Taking into regard the definition given by the National Bureau of Economic Research (NBER): "A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators", this gives us a basis to go on.
The 3 Signs of a Recession
The following signs are not "official" indicators but rather what the average person experiences when an economic recession is taking place. The stock market, lending institutions and the government are all aware of and can begin to address a recession before any of us feel the following effects:
1. Loss In Jobs - During a recession, companies typically experience loss in sales which in turn results in less production. To counter profit losses, they lay off workers. Employees who've been recently laid off then file for unemployment benefits. Meanwhile, the Bureau of Labor Statistics (BLS) collects data produced into U3 numbers which measure lost jobs. Recent information on unemployment conditions is presented on the evening news.
2. Real Estate Sales Decline - Global manipulations created by mortgaging firms, no doubt, have caused the real estate market to crash. Hence, the decline in the housing market cannot be totally blamed on foreclosures. As mortgage lending has decreased, so has new construction. This too explains our current economic recession.
3. Job Elimination - Our current economic recession has been brought on partly due to corporations laying off employees and not hiring or outsourcing their production overseas. At the same time, many small businesses have closed down.
It is important to note here that the BLS also calculates (but doesn't report) the total joblessness including the U3 number plus those people who have either given up looking for work, are no longer eligible for benefits or are underemployed. This figure (U6) effectively doubles the reported (U3) unemployment rates.
What You Can Do
After reading this article, we hope you can effectively explain the following: "What is a recession?" Not only must you understand the concept of recession, but also learn to protect your financial future too. We hope you'll take the time to educate yourself on topics as our economy, the monetary system, and how lending institutions operate.
by: Ylva Jansson
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