A recession is a period of economic slowdown. It can happen for a variety of reasons, including falling consumer spending or rising interest rates. During a recession, job losses can occur and unemployment will rise. This can have a ripple effect that affects the entire economy. In addition, the cost of goods and services will increase because companies will have to raise prices or reduce their production levels. This can also have a negative impact on the stock market, as stocks can drop significantly during a recession.
While some people define a recession by two consecutive quarters of decline in real GDP, the National Bureau of Economic Research (NBER) defines it as “a significant downturn in economic activity that spreads across sectors and lasts for more than a few months.” NBER focuses on economy-wide measures such as “real personal income less transfers,” nonfarm payroll employment, and manufacturing and trade sales adjusted for price changes.
During a recession, it is important to be patient and stick with your long-term investment strategy. It is also a good idea to invest in high-quality assets at discounted prices. This way, you can benefit from the rebound once the recession ends and have a better chance of beating the market over time.
Although many investors tend to avoid investing during a recession, it can be a great opportunity to purchase quality investments at lower prices. This can help you grow your wealth over time and make a positive impact on the world.