When total economic output shrinks instead of grows.
Over the first three months of 2009, U.S. GDP
fell at an annual rate of about 5.5%.
GDP: Gross Domestic Product: A measure of an economy's size and performance - meaning all of the Goods and Services produced over a specific time period.
SERVICE: Intangible Economic output that you can't touch, like hiring a lawyer, or getting your hair did. Services accounted for 78% of America's economy in 2008.
GOODS: Tangible economic output that you can use and touch, like a motorcycle, Ipod, book, or baseball. Goods accounted for about 20% of America's economy in 2008.
EXPORT: A Good or Service transported from a producing country to a consuming country - like Boeing selling a plane to Korean Airlines.
IMPORT: A Good or Service transported to a consuming country by a producing country, like the French wine your girl loves or your bank account at HSBC.
FISCAL STIMULUS: As economy starts to contract, the Federal Government may step in and either a) spend money or b) lower taxes to help the economy grow again.