Markets · Investing Glossary
What Is Recession?
A significant economic decline lasting at least two consecutive quarters.
The Full Definition
A recession is defined as a significant decline in economic activity — typically measured by two consecutive quarters of negative GDP growth, rising unemployment, and falling consumer spending. Recessions are the economic backdrop often (but not always) accompanying bear markets. On average, US recessions since World War II have lasted about 10 months. The stock market typically begins recovering before the recession officially ends, which is why waiting for the economy to "feel better" before investing often means missing the early part of the recovery.
Real-World Example
The 2020 COVID recession lasted only two months — the shortest on record — but triggered a bear market. The 2008–2009 recession lasted 18 months and was the most severe since the Great Depression.
Related Terms
- Bear MarketA period of declining stock prices, typically defined as a 20%+ drop from recent highs.
- GDP (Gross Domestic Product)Gross Domestic Product — the total value of all goods and services produced in a country.
- Unemployment RateThe percentage of the labor force that is jobless and actively seeking work.
- Market CycleThe recurring pattern of expansion and contraction that markets move through over time.