Plain-English definitions, reviewed by an independent investor
Recession
A recession is a broad, sustained downturn in economic activity, loosely two straight quarters of shrinking GDP.
A recession is a broad, sustained downturn in economic activity, loosely two straight quarters of shrinking GDP.
(Common rule: two consecutive quarters of negative GDP)
Why it matters
It is the macro backdrop that pressures earnings and markets.
Common confusion
Official calls lag; by the time it is named, markets may have moved on.
Frequently Asked Questions
Recession vs depression?
A depression is far deeper and longer; a recession is the common cycle.
Do stocks fall in recession?
Often in anticipation; markets can rise before the recession ends.