During a recession, which economic indicators typically worsen?

During a recession, economic indicators such as GDP and employment rates typically worsen due to a decline in economic activity. GDP, which measures the total value of goods and services produced in an economy, usually shrinks as businesses reduce production in response to lower consumer demand. This decline in output leads to a direct impact on employment; companies often lay off workers or freeze hiring to cut costs, resulting in higher unemployment rates.

In contrast, while inflation and interest rates, as well as exports and imports, may vary during a recession, their relationship to economic activity is not as direct as that of GDP and employment. Consumer spending and investment also tend to decrease during a recession, but the connection with GDP and employment is tighter, making it clear why those indicators are a prevalent focus during economic downturns. Overall, the worsening of GDP and employment rates is a hallmark characteristic of recessionary periods, highlighting the contraction in economic performance and its impact on the labor market.