Economic fluctuations present a recurring problem for economists and policymakers.
On average, the real GDP of the United States grows between
3 and 3.5 percent per year. But this long-run average hides the fact that the
economy’s output of goods and services does not grow smoothly. Growth is higher
in some years than in others; sometimes the economy loses ground, and growth
turns negative. These fluctuations in the economy’s output are closely associated
with fluctuations in employment. When the economy experiences a period of
falling output and rising unemployment, the economy is said to be in recession.