The Great Recession

A recession is a period of time were the economy temporary declines during which trade and industrial activity can be reduced. Recessions will last longer than a couple of months, typically it can last anywhere from six to eighteen months. A recession is however less severe than a depression. High interest rates are a cause of recession because they liquidity and the amount of money available to invest. Another factor that can contribute to a recession is reduced real wages, when real wages begin to fall the worker’s paycheck is not keeping up with inflation. Reduced consumer confidence is another factor that comes to play during a recession. When the consumers think the economy is bad/failing they are less likely to spend their money. According to frbsf.org article “What is the Difference Between a …show more content…
Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades. Dating back to the mid 1850s the United States has had about 32 recessions in its history. The two recessions that had lasted the longest at about 16 months each, was the first being in November 1973 to March 1975, and the other from July 1981 to November 1982. According to aboutnews.com article “The History of Recessions in the United States”, the Recession of 1973 officially started in November and lasted till March of 1975. There were reasons why the recession of 1973 happened, a lot of the blame though was put on the 1973 oil crisis and the fall of the Bretton Woods System after the Nixon Shock. According to wikipedia.com, the Bretton Woods System was