Are Working Hours a Good Recession Indicator?

   A recession is when an economy is unable to produce goods and services to its maximum potential. It usually comes after periods of high inflation. There is a general decline in overall economic activity and the GDP (Gross Domestic Product) falls for at least two consecutive quarters. Based on the eleven recessions which have occurred in the United States since 1948, economists believe that the number of hours employees work drops prior to a recession. In the 1980s, scholar Philip L Rones concluded that firms cutting the number of hours employees can work is so cyclically consistent, that working hours are one of the top major leading economic indicators of a recession. That trend continues during the course of the recession as well. When employees work fewer hours, they earn less money, and hence consumer spending decreases as a whole. That has a negative impact on the economy, which often leads to and worsens a recession. For example, during the 2007 to 2009 recession, wor...