THE GREAT RECESSION

 The late-2000s recession (or the Great

Recession) is an economic recession that began
in the United States in December 2007 as
determined by the U.S. National Bureau of
Economic Research. It spread to much of the
industrialized world, and has caused a
pronounced deceleration of economic activity.
This global recession has been taking place in an
economic environment characterized by various
imbalances and was sparked by the outbreak of
the financial crisis of 2007–2010. Although the
late-2000s recession has at times been referred
to as “The Great Recession," this same phrase
has been used to refer to every recession of the
several preceding decades. In July 2009, it was
announced that a growing number of economists
believed that the recession may have ended.
However, in the United States, the requisite two
consecutive quarters of growth in the GDP did
Business cycle:-
GDP growth in the world during
recession:-
What actually happens during recession:-

 Growth rate of GDP is falling or negative

 Firms decrease production and reduce
stocks
 Unemployment rises
 Inflation falls
 Investment falls
 Firms suffer from falling profits, falling
returns of investment, redundancy
costs.
Parts of Economic Cycle - Boom

 Low levels of unemployment – shortages

of labour occur pushing up wage rates
 High levels of consumer borrowing and
spending
 Firms working at full capacity
 Profit levels high
 Inflation Increasing
 Interest rates increasing
 Boom in housing market
 Sales of Motor Vehicles in the United States
Thousands per month, seasonally adjusted
700000 700000

600000 600000

500000 500000

400000 Domestic passenger car sales 400000

Number of

300000 300000

Imported passenger car sales

200000 200000

100000 100000

0 0
00 01 02 03 04 05 06 07 08

Source: Reuters EcoWin

 United States - Growth and Unemployment
Percentage rate of growth year on year at constant prices
5 5

4 4

3 3
Percent

2 2

1 1
Economic Growth
0 0

-1 -1

8.0 8.0
7.5 Unemployment Rate (% of labour force) 7.5
7.0 7.0
6.5 6.5
Percent

6.0 6.0
5.5 5.5
5.0 5.0
4.5 4.5
4.0 4.0
3.5 3.5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Source: Reuters EcoWin

 USA Gross Domestic Product
Annual Percentage Change in National Output at Constant Prices
20 20

15 15

10 10

5 5
Percent

0 0

-5 -5

-10 -10

-15 -15
30 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05

Source: Reuters EcoWin

Benefits of recession

 A lot of people think that an

economic recession is bad. while that
is partly true, there are certain
benefits:-
>Opportunities for entrepreneurs to

start new business(Low interest rates)

>Benefits service class(Tax cuts)

>Low attrition rates helps

companies(cost saving)
>Increased retirement age.