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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
When the economy shrinks for 6+ months. Usually bad for stocks.
Why It Matters
Recessions are part of the economic cycle - they've happened 12 times since 1945, averaging one every 6-7 years. While painful (job losses, market drops), they also create opportunities. Stocks often bottom and start recovering before the recession officially ends. Those who invest during recessions often see the biggest long-term gains.
Key Points
- Technically defined as two consecutive quarters of GDP decline (but the official call is made by economists)
- Average recession lasts about 10 months; the Great Recession (2007-2009) lasted 18 months
- Defensive stocks (utilities, healthcare, consumer staples) tend to hold up better during recessions
Related Terms
Common Questions
When the economy shrinks for 6+ months. Usually bad for stocks. Recessions are part of the economic cycle - they've happened 12 times since 1945, averaging one every 6-7 years. While painful (job losses, market drops), they also create opportunities.
Recessions are part of the economic cycle - they've happened 12 times since 1945, averaging one every 6-7 years. While painful (job losses, market drops), they also create opportunities. Stocks often bottom and start recovering before the recession officially ends. Those who invest during recessions often see the biggest long-term gains.
Technically defined as two consecutive quarters of GDP decline (but the official call is made by economists)
Average recession lasts about 10 months; the Great Recession (2007-2009) lasted 18 months
Defensive stocks (utilities, healthcare, consumer staples) tend to hold up better during recessions