RE: A Question For Expediting Veterans About Reces
From posts, it seems that not all expediters know the basics. A good introduction to the business cycle appears on the How Stuff Works web site. For the entire article see:
http://money.howstuffworks.com/recession.htm
Excerpt:
"In the United States, the economy follows a somewhat regular pattern of expansion and contraction. The economy will typically expand steadily for six to 10 years and then enter a recession for six months to two years. The point where the recession begins is known as a peak, and the point where it ends as known as a trough. Following the trough, the economy expands again toward another peak. Economists call the period of time between two peaks a business cycle.
"When the nation is in the early part of a recession, nobody knows for sure if it is actually a recession or not. The economy might turn around the next day, which would mean the contraction was just a temporary decrease in activity along a mostly upward track. Economists don't know if the economy is in recession until they can gather data over an extended period of time -- typically six months or more.
"There is no strict definition for recession. Different people consider different factors when making the assessment.
"Some economists and journalists define a recession as two consecutive quarters (three-month financial periods in the year) in which the gross domestic product (GDP) decreases. The GDP is the value of all the reported goods and services produced by people and institutions operating in a country. An overall decrease in the value of goods and services indicates that demand has decreased in most markets. If this is the case, it's a good bet that companies have laid people off, so unemployment is up. Usually the stock market is also in bad shape when overall value is decreasing. In general, the GDP is a pretty good indicator of the overall state of the economy."
Recessions can be short or long, mild or harsh, or something in between. Understanding the business cycle can help expediters make decisions and optimize their profits. For example, if you sense that econoimic expansion (a part of the business cycle) will tend to drive interest rates up, a new truck loan might be better made sooner instead of later.
Visually, I find it helpful to picture the business cycle as a clock face. 12:00 is the peak (top). 6:00 is the trough (bottom). Imagine the clock face having two colors; 9:00 to 3:00 is green, 3:00 to 9:00 is red. The top half (green) represents economic expansion. The botom half (red) represents contraction.
Next, imagine the clock having one hand, not two. The hand moves clockwise arount the clock (through the business cycle), showing where we are at the time.
As I said above, a recession can be long or short. If it is short, the clock hand will move quickly from 3:00 to 9:00 (8 months for example). If the recession is long, the hand will move slowly (2 years for example).
As also said above, a recession can be severe or mild. Image that as the intensity of the color on the clock face. A mile recession would be light red or pink. A severe recession would be dark red. Similarly, a mild expansion would show up light green on the clock face. A strong expansion would show up as dark green.
The above is an over-simplified illustration of the businee cycle, but it is a start for people who do not know economic basics. If you get into this deeper, you will assign color shades between each number on the clock and further divide the clock face into more-specific sections. For the purposes of this post, a two-color, two-section clock face (business cycle model) is enough.
At present, we are in a period of economic expansion, probably somewhere between 12:00 and 3:00. That means a recession (a period of GDP decline) is coming. How soon, how severe it will be, and how long it will last is anyone's guess.
Back to the original question, if you please.
For long-term veterans of the industry that have survived recessions, what was it like day-to-day, during true economic slow times (recessions)? In other words, for those of us who have not lived through a recession as expediters, what do we have to look forward to, and what do we need to do to survive?
