The Four Stages Of Economic Downturns

At the peak, consumer spending and GDP are growing, profits are rising, and employment is hunky-dory. The stock market continues to peak, and investors are enthusiastic. 

Then, things slow down a little. The economy is still growing, but the rate of growth has been reduced. Interest rates rose just a little. The stock market cools down. Soon enough, worry sets in.


Interest rates and inflation rise. The rate of growth in the GDP slows to 2 or 3%. People start predicting a recession. The stock market slumps.

Finally, the recession hits. GDP declines, profits fall, and capital spending declines.

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