Managing fluctuations is a critical activity. Most businesses are busy during the day but close down in the evening. On a Friday evening, the economy enters a severe contraction only to emerge into a boom on Monday morning. After the Christmas and New Year holidays, the economy shifts from boom into a deep recession. Arranging costs and employment to minimise the effects of these fluctuations is a daily task for managers. Further, the size of these fluctuations is enormous compared with the volatility of business cycles and yet companies seem to find business cycle recessions particularly painful.

Corporate anxiety about recessions has two sources. First, concern over how deep the fall in gross domestic product will be; and second, uncertainty over how long the slowdown will last. It is this second factor that makes recessions so difficult for companies. While retailers can never be sure how big their Christmas surge will be, they do at least know when it occurs and how long it will last. Although economic forecasts abound, no one can reliably pronounce on the duration of this current cyclical downturn.