How can one identify a recession? There are signs which can make us aware of a recession. Let us have a deeper look.

How can one identify a recession? There are signs which can make us aware of a recession. Let us have a deeper look.

Negative GDP Growth

Negative GDP Growth

This is the most common indicator of a recession. It is a sign of shrinking economy and this leads to low price, less profits, jobloss, decrease of purchasing power.

Declining Real Income

Declining Real Income

When inflation is higher than wage growth, real income decreases, reducing people's purchasing power and leading to lower consumer spending.

Weakening Manufacturing Sector

Weakening Manufacturing Sector

The health of the manufacturing sector, including exports, imports, and trade imbalances, reflects the overall economic strength and self-sufficiency.

Falling Wholesale and Retail Sales

Falling Wholesale and Retail Sales

 A continuous decline in sales can be a sign of shrinking demand and economic slowdown.

Rising Unemployment

Rising Unemployment

While unemployment is a lagging indicator, it can confirm an economy's recessionary stage.

Inverted Yield Curve

Inverted Yield Curve

This occurs when the yield on short-term government bonds exceeds the yield on long-term bonds. This unusual situation can indicate investors' fear of a future recession.

Falling Consumer Confidence

Falling Consumer Confidence

A decline in confidence can lead to lower spending and exacerbate the recession.

Tightening Credit Conditions

Tightening Credit Conditions

Banks may become more cautious when lending during economic uncertainty, making it harder for businesses and individuals to access credit.