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Project on Stock Markets

Project on Stock Markets



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Published by Rohx1003

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Published by: Rohx1003 on Oct 18, 2009
Copyright:Attribution Non-commercial


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What Is Economic Recession
When GDP growth is negative for two consecutive quarters or more. For all practical purposes though, a recession starts when there are several quarters of slowing but still positive growth. The first quarter of negative growth in a recessioncycle is often followed by positive growth for several quarters, and then another quarter .of .negative.growth. This definition is somewhat unpopular with many economists as it does not take intoconsideration changes in other economic variables such as current unemploymentrates.or .consumer .confidence.and.spending.levels. The official agency in charge of declaring that the economy is in a state of recessionis the NATIONAL BUREAU OF ECONOMIC RESEARCH (NBER). NBER'Sdefines recession as a "significant decline in economic activity lasting more than afew months" For this reason, the official designation of recession may not comeuntil.after .we.have. been.in.one.for .as.ubstantial.amount.of .time. It is actually quite natural for countries to experience mild economic recessions. Thisis a built-in factor of a society economic cycle as spending and consumption aregoing.to.increase.and.decrease.along.with. prices. Rarely, experiencing many of these factors simultaneously can evoke deepeconomic recession or depression
Definition of Recession
Recession is not to be confused with depression. Recession means a slow down or slump or temporary collapse of a business activity. In its early stage it can becontrolled in a methodical manner. Experience helps to avert total collapse.Unchecked, it leads to severe depression. Depression is a dead end. It is time to closeshop completely. It is a total state of irrevocable economic failure. When a country isdoing well all round its Gross Domestic Product (GDP) is on the rise.Overall economy is bullish; it is not only the stock exchanges that tell riches to ragsstories but even small businesses. It all adds to the national exchequer. An economistis likely to give a detailed, comprehensive definition of recession. But for thelayman who has been affected knows it only one way-when he loses his job and hasno money to pay his credit and loans. Recession is when the consumer facesforeclosure and the banker comes knocking for his pound (or dollar) of flesh. Manycompanies and whole countries go bankrupt for want of liquid funds and cash flowfor .even.daily.requirements. If you look at it from the point of view of a businessman, recession is a transitory phase. The Business Cycle Dating Committee of the National Bureau of EconomicResearch has another definition. It profiles the businesses that have peaked withtheir activity in one season and it falls naturally in the next season. It regains itsoriginal position with new products or sales and continues to expand. This revivalmakes the recession a mild phase that large companies tolerate. As the fiscal positionrises, there is no reason to worry. Recession can last up to a year. When it happensyear .after .year .then.it.is.serious.
Are we facing a recession or not? Yes, for the simple reason that not only our neighbors but our friends are unemployed. There is less of business talk and more billing worries. Transitory recessions are good for the economy, as it tends tostabilize the prices. It allows run away bullish companies to slow down and takestock. There is a saying, ‘when it’s tough the tough get going’. The weaker companies will not survive the brief recession also. Stronger companies will pullthrough its resources. So when is it time to worry? When you are facing aforeclosure, when the chips are down and out and creditors file cases for recovery.

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