Economic Recovery

AAA

DEFINITION of 'Economic Recovery'

A period of increasing business activity signaling the end of a recession. Much like a recession, an economic recovery is not always easy to recognize until at least several months after it has begun. Economists use a variety of indicators, including GDP, inflation, financial markets and unemployment to analyze the state of the economy and determine whether a recovery is in progress.

INVESTOPEDIA EXPLAINS 'Economic Recovery'

Some confusion commonly results from the use of both leading and lagging indicators in analyzing whether an economic recovery is in progress. Leading indicators, such as the stock market, often rise ahead of economic recovery. This is because stocks are priced based on future expectations. On the other hand, employment is typically a lagging indicator. Unemployment often remains high even as the economy begins to recover because many employers will not hire additional personnel until they are confident there is a long-term need for new hiring.

RELATED TERMS
  1. Biflation

    The simultaneous existence of inflation and deflation in an economy. ...
  2. Economic Indicator

    A piece of economic data, usually of macroeconomic scale, that ...
  3. Contraction

    A phase of the business cycle in which the economy as a whole ...
  4. Economic Collapse

    A complete breakdown of a national, regional or territorial economy. ...
  5. Economic Cycle

    The natural fluctuation of the economy between periods of expansion ...
  6. Real Economic Growth Rate

    A measure of economic growth from one period to another expressed ...
RELATED FAQS
  1. Where was the Dow Jones when Obama took office?

    When President Obama took office on Jan. 20, 2009, the Dow Jones Industrial Average slumped to 7,949.09, the lowest inaugural ... Read Full Answer >>
  2. What is the difference between consumer surplus and economic surplus?

    The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual market price ... Read Full Answer >>
  3. What does it signify about a given product if the consumer surplus figure for that ...

    High consumer surplus for a particular product signifies a high level of utility for consumers and may carry some implications ... Read Full Answer >>
  4. Is credit a form of fiat money?

    To understand why credit is a form of fiat money, one must first understand what money is. At its most basic level, money ... Read Full Answer >>
  5. What is the difference between fiat money and representative money?

    Fiat money is physical money (paper money and coins), while representative money is something that represents intent to pay ... Read Full Answer >>
  6. Which factors can influence a country's balance of trade?

    A country's balance of trade is defined by its net exports (exports minus imports) and is thus influenced by all of the factors ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Coping With Inflation Risk

    Inflation is less dramatic than a crash, but it can be more devastating to your portfolio.
  2. Economics

    Ben Bernanke: Background And Philosophy

    Get some insight into the man at the forefront of key U.S economic decisions.
  3. Bonds & Fixed Income

    Tips For Recession-Proofing Your Portfolio

    Find out what to do when the sun sets on a burgeoning market.
  4. Taxes

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  5. Personal Finance

    State-Run Economies: From Public To Private

    Find out how former Iron Curtain countries used private enterprise to join the world financial markets.
  6. Personal Finance

    How Will The Subprime Mess Impact You?

    The subprime collapse could mean doom and gloom for housing, equities and the overall economy.
  7. Economics

    What is a Capital Account?

    Capital account is an economic term that refers to the net change in investment and asset ownership for a nation.
  8. Economics

    Understanding the Fisher Effect

    The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate.
  9. Investing

    The Labor Market Recovery’s Missing Ingredient

    Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly.
  10. Economics

    Gambling on Macau: Too Risky?

    Macau was once heralded as the new Las Vegas for casino investors. Is it too late?

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center