ShmoopTube

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finance a la shmoop what is recession well here's one here's another and

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another and well here's an economic recession so technically when GDP [Set of teeth appear]

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declines for two sequential quarters that is a recession and you can glean

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enough from this most excellent chart that in most years GDP grows not

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massively but relatively steadily and with compounding the US has grown GDP

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from a trickle to a torrent in a recession economic activity declines [Recession definition appears]

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maybe a half a percent a percent maybe two percent and you might not think

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that's a big deal but we're a nation living on credit that is plastic these [Man using credit card]

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things mortgages car loans bunch of other credit II kind of things so a

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decline of even 1% when we were expecting growth of two is a delta of 3%

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and that change is exacerbated with leverage when people fear for their job

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safety they stop buying those extra pairs of earrings at the mall they get [Woman biting her nails]

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one less tattoo and they stop making appointments at Botox Depot so all of

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the sudden activity in given quote luxury sectors or otherwise unquote just [Person receiving a tattoo]

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stops dead and there's a multiplier effect here as well because a wealthy

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banker who used to throw 20 parties a year now only throws four so all those [Calendar displaying party days appears]

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bartenders and oboe players and ice sculptors yeah they're all out of work

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as well and then they buy less beer and that new ice pick the sculptor was gonna

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buy yeah well she'll just sharpen her own and make do with it you know until

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the GDP grows again after the recession is over in a few years so yeah [Boom/bust cycle appears]

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recessions they're dangerous and credit high credit makes them all the more

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dangerous so be wary

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