Business Cycles, Recessions, and Depressions

          It is so tough to predict the business cycle because it is driven by a tug-of-war between expectations and reality. What I mean by this is that companies, businesses, and households are constantly basing their plans off how much they expect their sales to grow by, Greg even states, "Business cycles are an unavoidable and largely unpredictable feature of market economies."(2 Ip) These are the why the business cycle is so hard to predict.
          There are two kinds of markets that exist. There is a bull market and a bear market. A bull market is when economic activity and investments appear to be long-term climb. The unemployment rate is usually low as well. A bear market is when economic activity and investments appear to be decreasing. The unemployment rate usually goes up during this period. (2 Ip)

          The cause of economic problems has differed over the years.  In the nineteenth century natural disasters and bank scares caused it to crash.  In 1973 and 1990, it crashed from a spike in oil prices.  In 2001, it crashed because the technology investments crashed.  In 2007, it crashed because housing values plummeted.  It is almost like like a reoccurring disease.  "We can develop immunity to the last virus we contracted.  The problem is that it mutates and we're susceptible all over again." (3 Ip)
          A recession is two or more consecutive quarters of declining GDP.  A recession leads up to a depression, but does not always become a depression.  In order for a recession to turn into a depression the bungee cord has to break.  What I mean by that is the economy has to hit rock bottom and stay there for a while.  Truman described recession and depression as, "a recession [is] when your neighbor loses his job; it's a depression when you lose yours." (5 Ip)