Recession indicators

GDP stands one of the prime indicators for the recession.

The reason for recession is imbalance in aggregate demand & supply.

Fluctuations in businesses & consumer confidence can cause firms and consumers to bunch their aggregate demand at certain time periods which can cause the level of aggregate demand to fall short of potential GDP or to exceed it in short run.

Eg : In late 1990 there was big investment in mobile, computing & IT systems about 21% of GDP in 2000 but when investors realised they might not get enough returns they pulled out the money this happened when inflation matched with GDP also a indicator and then the recession arrived in next 8 mths
similar case happened in 2008.

The chart indicates rise in inflation matched with ris in GDP is a peak point of GDP growth where one is expected to withdraw investmenets since at this stage the rates expected are more and one gets less interest rates which forces pulling out money cusing IT bubble burst.

Recessionary periods are 1983 ------ +9 yrs-------- 1992------+9 yrs------2001-----+7yrs-----2008. the cycle is fixed 7-8 yrs approx the gap in recession is reducing since there was large industrialisation in 1980's and which decreased gradually causing lesser time spam for investmants.

The next recession is predicted 2014-15.

Never loose heart if you have lost money in investments there is an opportunity in every 7-8 yrs.

Recession is best time to invest in blue chip stocks & market index one of the safest bets could expect returns abt 300-400% and do not leave the position till recovery which takes next 2-3 yrs.

There are many indicatiors of economic rise & fall GDP stands one of them.

Enjoy making money. 

Kuldeep H. P
Making love for economics & financial analysis