What is a Recession
To answer the question, “What is a recession?” we must […]
To answer the question, “What is a recession?” we must start with GDP.
A recession occurs when a country has receding GDP (Gross Domestic Product) in two successive quarters. In other words, the amount a country produces and sells declines for six months or more.
GDP is driven by all factors affecting a country’s ability to work and produce products and services. The more efficient a country is at producing, the stronger its GDP. The weaker a country is at producing, the more vulnerable it is to a declining economy. Here are key indicators that a recession is occurring or is likely.
- High unemployment
- Weak supply chain
- Dependent for key natural resources
- Dependent for energy sources
- Dependent on other countries for needs
What is a recession in housing?
A recession does impact house values. However, house values do not always go down. Only two of the last six recessions included house depreciation. The average house appreciation since 1991 is 4.4%. This means if you purchase real estate long-term you will most likely acquire an asset with appreciated value.
