Pale Recession

Pale recession is a phrase used in economics that illustrates a situation in an economy where a recession has occurred in only one sector of the economy. Pale recession was first used by earlier Chairman of Federal Reserve Board Alan Greenspan in May 2008. A pale recession generally refers to a sluggish recession that affects only a single sector of economics. The term “pale recession” was used in the context of US employment. The situation of US employment was such that it was in a declining condition still not strong enough to affect the entire economy of the country.

According to Greenspan, a pale recession emerged in the US economy as the economy was caught in a “tug-of-war” between rich businesses and financial institutions which were at loss. This situation was an unusual one as there is no winning situation on either side. Neither the cash-rich businesses nor losing financial institutions could win the battle.

Economic recession has become a trend as there is a lot of uncertainty in the economy. Significant increases in the cost of staple foods, oil and other services have to lead to a period of recession. Sometimes recession is not that strong to harm the entire economy of any country but affects any singular sector. This phenomenon is referred to as pale recession.

Recession

In order to get the concept of pale recession properly, one has to understand the phenomenon of recession. Recession can be refereed as a contraction phase of the business cycle, where there is a significant decline in economic activity. In simple terms, recessions are characterized by a decline in real gross domestic product (GDP), real income, and industrial production and also wholesale-retail sales. Recession is the outcome of lack of confidence among the consumers. When the consumers lose faith in the economy and expect that the economy would not grow, then there is diminishing demand for goods and services. Due to diminishing demand for goods and services, production level also decreases. Since each and every factor in economies are connected, a decline in production leads to a decrease in employment.

There are a few factors that indicate that the economy is going through the phase of recession. A constant drop in stock markets, an inverted yield curve, considerable dip in the unemployment rate and Index of economic Leading are some of the possible predictors of a recession.

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