Recession.
In plain English
A recession is a stretch where the economy contracts, businesses produce less, unemployment rises, and consumer spending drops. The official call in the U.S. is made by the National Bureau of Economic Research (NBER), which looks at multiple indicators (GDP, employment, income, retail sales). The popular 'two consecutive quarters of negative GDP' definition is a rule of thumb, not the official rule.
01Why it matters
Recessions are when financial stress is highest: layoffs spike, hours get cut, and investment accounts may be down. They're also when emergency funds prove their worth. People with 3-6 months of expenses saved sail through recessions far more easily than people who don't. Recessions historically last 8-18 months and have happened roughly every 6-10 years on average.
02The math, step by step
The 2008-2009 recession (the 'Great Recession') officially lasted 18 months according to NBER. Unemployment peaked at 10%. The S&P 500 fell about 50% from peak to trough. Within a few years, the market had not only recovered but exceeded the pre-recession high. People who kept their jobs and kept investing through the dip ended up significantly ahead of those who sold during the worst of it.
03What this is NOT
A bear market is about stock prices falling. A recession is about the broader economy slowing. They sometimes overlap but not always, there can be bear markets without a recession, and brief recessions where stocks barely move. They're related, but not the same.
04Receipts
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