Recession

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The phase of the economic cycle when the economy is experiencing a decline in economic activity is known as a recession. During this phase, levels of employment and production decrease, and the growth of the economy slows down. This can lead to decreased consumer spending, business investment, and demand for goods and services, which in turn can further exacerbate the economic slowdown.

A recession is typically characterized by several factors, including falling gross domestic product (GDP), rising unemployment rates, and a decline in consumer and business confidence. Other indicators that may signal a recession include a decrease in industrial production, a decrease in retail sales, and a decline in housing starts and permits.

Recessions can have significant economic and social impacts. They can lead to job losses, reduced consumer spending, and lower business profits, which can in turn lead to further economic decline. Governments and central banks may take various measures to try to counteract the effects of a recession, such as fiscal stimulus programs, monetary policy adjustments, or regulatory changes.

In contrast to a recession, the expansion phase of the economic cycle is characterized by increasing levels of economic activity, rising employment and production, and a generally growing economy. The growth phase is typically marked by strong consumer and business confidence, high levels of investment, and increasing levels of economic output. Recovery is a phase that comes after a recession, in which the economy begins to rebound and recover from the economic downturn.