Recession: How it Affects Business

What is a recession?

• One common definition is a sustained decline in economic activity that lasts more than a few months. Also, significant stock market drops often precede recessions.
• A more technical definition that economists use is two consecutive quarters of negative growth in the Gross Domestic Product (GDP).

To plan an effective strategy for mitigating a recession's impact, what are some of the key external factors companies should monitor?

• Keeping track of the unemployment rate is important. As rates rise, customer purchasing power declines. And as more people rely on credit to get by, interest rates tend to rise.
• Monitoring price level changes is also crucial. Increases signal inflation, while falling levels suggest deflation.
• Tracking global stock market performance is key as well. As a general rule, countries where stocks are performing poorly over an extended period are in a recession.

Overview/Description

Recession changes the playing field for business. This Business Impact examines its key factors that companies need to take into consideration.

Target Audience

Any individuals interested in gaining essential business finance knowledge