The Recession and You

Recession - a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. Recessions are actual typical in economics, since economies fluctuate. These are "like a Cheshire cat, might disappear, reappear, and change shape." (5) They constantly are different and can be very hard to predict. The word alone is hard to define, so trying to predict when there will be one is just as hard. It is a period of time when all economic activity is much less then it should be, but that can happen whenever a major crisis occurs in a country. Recessions rarely lead to Depressions since "they occur when the economy's normal or recuperative mechanism fails to engage." (5) During depressions no economic activity is made which leads to many problems. Things such as unemployment rate increasing, value of things increase uncontrollably, and among other things. They are typical caused by a series of bad investments and giving businesses and consumers unneeded things that basically put down the idea of future spending.
The market though does have a cycle that it follows and it shifts between two different forms of market, a bull market or a bear market. A bull market is when market activity and investments are increasing. Even in a period of time when people expect prices to raise would mean that it is a bull market. Where as a bear market is simply the opposite of the bull market. During this period of time activity is down and stocks within the stock markets drop. This however only lasts for a couple months typically. There are great examples of the different switches of market throughout the US history. Before the Great Depression the stock market experienced a bear market which meant that the investments and stocks lost all value and people began to loose money. Another example would be understanding how the stock market works. People like to buy stocks during the bear market since prices of stocks are cheap, while the bull market means that people want to sell since the stocks are worth much more than what it was before.