What feedback loop often pushes an economy into recession?

Answer: Lower demand makes firms cut jobs

Lower demand makes firms cut jobs ✓ — When households and businesses spend less, firms sell less and often cut output or jobs. Those lost wages then reduce spending even more, so the slowdown can reinforce itself until confidence, credit, or policy support breaks the loop.

Rising wages make everyone stop buying — Higher wages can squeeze some firms if they rise faster than productivity, but wages are also income for workers. Recessions usually deepen when demand and jobs fall together, not because everyone simply stops buying after a raise.

Cheaper imports make money leave forever — Imports can hurt specific industries, but money does not literally leave the economy forever. A broad recession is more about weak demand, investment, credit, and jobs feeding back on one another across many sectors.