The movement added to investors’ concern about a possible recession in the United States. This pessimistic sentiment was further intensified by a jobs report released last Friday, the 2nd, which showed Unexpected slowdown in hiring in July,
A recession, by definition, is a decline in a country’s economic activity. Since 1974, an economy is considered to be in recession when there is a decline in GDP (gross domestic product) for two consecutive quarters, which is the total value of goods and services produced in the country during a given period, compared to the previous quarter.
Economic recession involves various situations. These include a reduction in the level of economic activity, an increase in unemployment, a drop in consumption and investment indicators, a drop in family income and a reduction in the total income of society, which includes people’s salaries and company profits – this withdrawal can result in lower profits and a higher risk of bankruptcy.
There is also the concept of a technical recession. In this case, the economy would have to show a decline for three consecutive quarters, or nine months, to be considered in a technical recession.
This is an economic warning sign. The most worrying situation is when this economic contraction lasts for a long time, affecting multiple sectors.
There can be many reasons for this. Causes of recessions can include poorly planned or poorly executed economic policies, as well as external shocks that cause a sudden reduction in production, consumption, and investment.
Economic recession affects many social and economic aspects. This can lead to increased poverty and a decline in health, education and housing services.
Recessions affect people’s lives because we have fewer jobs, more people in vulnerable situations, less purchasing power, and, therefore, less well-being.
Juliana Inhaez, Professor and Coordinator of the Graduate Course in Economics at Insper
The US economy remains strong. In the last quarter, the US economy grew more than expected, driven mainly by consumer spending, which represents more than two-thirds of the country’s GDP (gross domestic product). The US service sector activity index rose from 48.8 in June to 51.4 in July, while analysts had forecast a rise to 51.
There is no recession right now. Although there are signs of a slowdown in the US economy, this does not mean a recession. It is a warning that a recession may occur in the future, but it is not yet a reality, explains Carla Beny, economist and MBA professor at FGV.
