Blog Cycles, Recessions, and Depressions

A business cycle, by definition, is the "downward and upward movement of levels of Gross Domestic Product". Every free market economy has these, they can not be avoided. Economists fail to predict these business cycles no matter how hard they try. Why is it so hard to predict? The answer to this is, no one can predict the future. Economist can only go by the past and make predictions off of that. Meaning that the predictions will not always be 100 percent accurate. "The future is inherently uncertain, so these decisions often depend as much on gut feelings as cold calculation" (2). A bull market is used to describe a high in the economy while a bear market is used to describe a low or recession in a market. These phrases come from the ways the animal strikes it's opponent. A bull strikes upwards with it's horn and a bear strikes downwards with it's paws. "Bear markets are more violent than bull markets" (2), because of chaos. Way back when there were different causes of an economic recession/crash than there are today. Today technology investments can, oil prices and the house market have all been reasons why there has been an economic recession/crash. In early America an economic recession/crash was usually due to a natural disaster such as crop failure. A recession is a quick lull in the economy. The economy quickly regenerates itself from this though. A depression is caused when this lull is not regenerated and keeps on going lower. Recession and Depression can be described in the words of Harry Truman, "a recession [is] when your neighbor loses his job; it's a depression when you lose yours" (5).