Question

The 2001 recession ended in November 2001, but the perception of "bad economic times" lingered into 2002 and 2003. What evidence do these graphs provide concerning the lingering perception of a recession? Hint: contrast the performance of the unemployment rate and the level of real GDP during the period from 2001 through 2003.

Answer 1

A recession is when the economy declines significantly for at least six months. That means there's a drop in the following five economic indicators: real GDP(when the national output or income falls), income, employment, manufacturing and retail sales. A recession occurs when there are two or more consecutive quarters of negative gross domestic product (GDP) growth. In other words, economic growth slows during a recession. Attributes of an economy experiencing a period of recession include a fall in sales and revenues of corporations, a fall in stock prices, falling incomes and a high unemployment rate. When an economy is facing recession, business sales and revenues decrease, which cause businesses to stop expanding. When demand is not high enough, businesses start to report losses and first try to reduce their costs by lowering wages or keeping wages where they are and ceasing to hire new workers, which increases the unemployment rate. A decrease in the GDP causes firms that aren't recession-proof to report losses and can cause some companies to go bankrupt, resulting in massive layoffs that also increase unemployment. This is what we all witnessed during the period of 2001-2003. But as we say every recession brings boom in an economy this is what we witnessed with USA's economy.