The basic premise of the business cycle is that an economy expands and contracts according to aggregate demand.  For example, suppose housing growth is expanding.  In that case, we would expect aggregate demand to increase for building materials, furnishings, appliances, and so on.  Once that housing demand slows, the other demand contracts as well.  The result: excess inventory, underutilized factories, and workers. 

Many things can hasten or prolong the contraction, and government always tries to smooth out the troughs, but inevitably the results are the same: a recession.  Unemployment rises, industrial production slows, commodity demand shrinks, investment shrinks, and so forth.

How closely we follow the traditional investment cycle depends on a few variables

1. Recession characteristics
2. Global demand
3. Bailout impact
4. Consumer spending
5. Interest rates

My goal is to figure out what makes this recession unique – what are its characteristics – so that I can invest correctly.