Economic Cycle: Recession

Economic Cycle (Recession)

The last phase of Capital Corp Merchant Banking’s discussion of the Economic Cycle is the period of Recession.

Recession is defined as a significant decline in activity across the economy lasting longer than a few months. Similar to the previous discussion of Contraction, a Recession will last longer than a few months until an unknown time.A recession is much more visible to the public in that all the economy benchmarks such as industrial production, employment, real income and stock markets experience negative levels as compared to times of Prosperity.
This period of the economic cycle is unfortunately unavoidable (everything being relative) given the cycle is circular but there can at times be certain benefits, for example: revised governmental regulations to prevent future financial crisis, and reduced interest rates to entice borrowing.

The “R word” is one that many across the global economy fear but in the end it is forever and always the “D word” (or Depression) that really scares us all.

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Respectfully,


Capital Corp Merchant Banking, Inc.