Impact of Economic Recession Indicators
A recession is a decline in economic activity that impacts individuals and businesses. When economic activity decreases, revenues and profits decline as well. Businesses then need to decrease their costs, and let go of employees. Companies and individuals are unable to pay off their loans, which leads to large debt. Stock prices and dividends decline, people get laid off, and small businesses close. Individuals have to resort to changing their lifestyles to adjust to their loss of income. This includes needing to downsize or even forfeit their home and not being able to afford education. When economic health declines, mental health is heavily impacted by these drastic changes. Simply speaking, recessions are bad and unfortunately inevitable. There are a lot of economic factors that indicate when a recession is either happening or about to happen.
So which economic factors actually indicate an economic recession? There are a lot of textbooks and articles out there that easily answer this question. However, we answered this question through our own dataset and demonstrate with different graphs, which economic factors we should care about. As a result, we discovered that an inverted yield curve is a big indicator of an incoming recession. This occurs because investors are not optimistic about the economy, and short term interest rates exceed long term interest rates. We also found that when a recession occurs, the S&P500 falls. Scroll through the rest of our website to see different visualizations of our thesis and click below to see for yourself.