Why recession in 2022
Before knowing about the recession let's come to the understanding of what the business cycle is. It means , in an economy the goods and services meet the ups and downs in some situations. The repetition of the growth and fall cycle is the business cycle. There will be
4 phases in this business cycle.
1)Expansion - In this phase the goods and services cost is getting increased. This is the favorable phase for us.
2)Peak - The growth in the expansion phase reaches its peak level.
3)Recession - In this phase the production of goods getting down, so the income and job growth will decrease as well.
4)Trough - This is the bottom of recession and in this phase the economy will start recovering.
This whole cycle will repeat again and again.
Now come to the explanation of recession, A significant decline in economic activity that is spread across the economy and that lasts
more that a few months that is what recession is.
IMF predict the world's growth rate in 2022 is 4.2% and in 2023 it will be 3.8% gets slow down.The growth is slowing down all across the world. Except China all the other countries are going to slow down in the economy as in China the growth rate in 2022 is 5.6% and in 2023 it will be around 6.0%. From this analyzation, are we in a recession and the answer is yes. Recession means the economy is going to slow down not means everything is going bonkers. In 1930, the GDP of US shrunk by almost 50%. The stock market would take 15 years to recover from that point. This is how the depression was in 1930's.
4 phases in this business cycle.
1)Expansion - In this phase the goods and services cost is getting increased. This is the favorable phase for us.
2)Peak - The growth in the expansion phase reaches its peak level.
3)Recession - In this phase the production of goods getting down, so the income and job growth will decrease as well.
4)Trough - This is the bottom of recession and in this phase the economy will start recovering.
This whole cycle will repeat again and again.
Now come to the explanation of recession, A significant decline in economic activity that is spread across the economy and that lasts
more that a few months that is what recession is.
IMF predict the world's growth rate in 2022 is 4.2% and in 2023 it will be 3.8% gets slow down.The growth is slowing down all across the world. Except China all the other countries are going to slow down in the economy as in China the growth rate in 2022 is 5.6% and in 2023 it will be around 6.0%. From this analyzation, are we in a recession and the answer is yes. Recession means the economy is going to slow down not means everything is going bonkers. In 1930, the GDP of US shrunk by almost 50%. The stock market would take 15 years to recover from that point. This is how the depression was in 1930's.
Now take the data of GDP per Capita of the world on the last one decade. GDP per capita simply means that how much money per person exists in the world.
1)Take a look at the data between 2010 and 2020 there has hardly been any growth. Its flat that means on the world aggregate level has not grown. This is the first key data to remember.
2)The second key as per the data for the last 10years in India the overall GDP has no issues and no fall down. From this can conclude that
there will be an asymmetric growth all over the world.
Current job market
As per the current job market so far stable, on the month of April 428,000 jobs are increased, but the companies are decreased the outlook that means they would not post new job openings easily. There is a good chance for the job market to slow down in incoming months.
We are seeing clues of economy slowdown like these everywhere, stock market indices-S&P 500 has gone down by 20% and Nasdaq 100 has gone down by 30%. Specifically technology sector has come down a lot. If the private investments are going to cut down, then the first impact is for the technology sector. This is why technology sector is beaten down heavily.
Stock market always looks at the future. If it seems immediate problems in short term for its growth, it will tend to go down. That is what happening now. Until the inflation is comes to the control, we can expect the market to be volatile like this. Market will go up only when it sees the chances of economy expansion is higher than the economic contraction. No one can predict when it will happen. Accepting that this is the part of business and economic cycle, we should not bother the investments and let it grow for long term. This too shall pass as well.
As per the current job market so far stable, on the month of April 428,000 jobs are increased, but the companies are decreased the outlook that means they would not post new job openings easily. There is a good chance for the job market to slow down in incoming months.
We are seeing clues of economy slowdown like these everywhere, stock market indices-S&P 500 has gone down by 20% and Nasdaq 100 has gone down by 30%. Specifically technology sector has come down a lot. If the private investments are going to cut down, then the first impact is for the technology sector. This is why technology sector is beaten down heavily.
Stock market always looks at the future. If it seems immediate problems in short term for its growth, it will tend to go down. That is what happening now. Until the inflation is comes to the control, we can expect the market to be volatile like this. Market will go up only when it sees the chances of economy expansion is higher than the economic contraction. No one can predict when it will happen. Accepting that this is the part of business and economic cycle, we should not bother the investments and let it grow for long term. This too shall pass as well.
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