The more we understand how to identify, predict and protect ourselves from economic hardships the better our chances of minimizing the effects.
Keep reading and I'll explain some of the signs and symptoms.
Recession The best place to begin when explaining what is a recession is to define recession.
The National Bureau of Economic Research (NBER) defines recession as "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.
" 3 Signs of 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.
Jobs Loss - Unemployment starts to increase rapidly during a recession or depression as companies try to off-set their profit losses caused by a decrease in production and sales.
The unemployment statistics you hear about on the evening news is the U3 number produced by the Bureau of Labor Statistics (BLS).
It includes workers who have been recently laid off and are receiving unemployment benefits.
Housing Market Hits - Even without our current mortgage and foreclosure crises, during times of economic recession there is a marked decrease both in mortgage lending and new construction.
Obviously, because of intentional manipulations by lending institutions which resulted in a housing crash, this has never been so true as with our current economic recession.
No New Jobs - After the initial lay-offs and small business closures, larger corporations continue to issue hiring freezes or ramp up their outsourcing efforts overseas.
Either way the results are no new jobs.
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 Next? Now that we've answered the question "what is a recession?" we can begin to move forward with protecting our financial futures.
I encourage you to learn all you can about our economy, our monetary system and our banking institutions to further educate yourself and discover ways to best protect yourself.