Recession Cycle

Recession Cycle also known as Business Cycle is the normal part of the healthy economy. The Normal Business Cycle is of 7-12 years and every 7-12 years, the Recession comes in a healthy Economy.

Recession means when for 2 consecutive quarters, the GDP goes below ZERO. See the above diagram. The above diagram is of Normal Business Cycle or Recession Cycle. According to the diagram, when the economy reaches the peak, it starts contracting. See the period of Contraction.

Suring the period of Contraction, the Businesses shrink in their size and reaches the bottom known as “Trough”. After reaching the Trough, The Economy again starts recovering and this time it breaks the previous peak.

Again, this Recession Cycle (Business Cycle) lasts for 7-12 years and than once again it goes to trough. and again it breaks the previous peak.

See the above diagram and you will understand it very clearly. Every time when the economy touches the trough, the next time it will break the previous peak. On an average Recession lasts for 18 months except the great depression of 1929 which lasted for 4 and half years.

Sometimes, the economy goes into double dip recession or W-shaped recession, in which after recovering from trough, it again slips into another trough and than recovers.

In short, recession is a part of the normal Business Cycle. You should not worry about it. This time also once we will reach the trough, the economy will bounce back and the next time it will break the level of the previous trough. Next time you will see the more higher stock market levels and prices of Real Estates.

So Don’t afraid of Recession but instead start investing Now…!!!