What causes economies to go into recession?

There are four primary causes of recessions: decreased confidence in the economy, higher interest rates, inflation, reduced spending power of wages. Confidence in the market effects what people are willing to invest; when people are not confident, they do not want to invest their money in the markets. High interest rates make people think harder about making large purchases or spending on items that require a loan. Inflation refers to the dollar being less powerful and goes hand-in-hand with the spending power of wages. If your weekly salary cannot cover as much as it could in the past, you are able to buy less.