A business cycle contraction.
When a recession hits, there is a significant decline in economic activity. They can last months or even years.
A nation in recession will see rising unemployment, falling GDP, reduced incomes, and contracted manufacturing.
Many feel that an economy is in recession with two consecutive quarters of negative GDP.
These can be caused by:
- Sudden economic shock
- Too much inflation
- Too much deflation
- Excessive debt
- Asset bubbles
- Technological change
While there is no definition of what constitutes a depression, it is thought to be much deeper and for a longer period of time as compared to a recession.