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Recession- what is it?

The first major U.S. bank has declared the world's largest economy is in a recession.
An economist for Merrill Lynch & Co., "According to our analysis, this [recession] isn't even a forecast any more, but is a present day reality."

Many economists disagree, but most contend the country is inching closer to darkened economic times.

The head of the prestigious National Bureau of Economic Research said the United States is not in a recession, but added that there is more than a 50 percent chance it will be.

The president of the group, Martin Feldstein, said slow but continued economic growth was the most likely outcome "for the next quarter or so," but added: "I think there is a serious risk that it could get worse than that and we could see an actual downturn.
"I think we're not in a recession now," he said.

Goldman Sachs said it expects the U.S. economy to drop into recession this year, prompting the Federal Reserve to slash benchmark lending rates to 2.5 percent by the third quarter.


Some experts predict that the weakening economy may force the Fed to lower policy rates by an additional 1.75 percentage points from the current 4.25 percent.

According to Investopedia, a Recession is
" A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)."

"Investopedia Says... Recession is a normal (albeit unpleasant) part of the business cycle. A recession generally lasts from six to 18 months."

"Interest rates usually fall in recessionary times to stimulate the economy by offering cheap rates at which to borrow money."

source investopedia.com

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