By Tobias Abramenko - What are they and why are they important?

What is a recession?

A recession is a decline in Gross Domestic Product (GDP) in 2 consecutive financial quarters, or about half a year.

What does a recession usually look like?

A decline in GDP means less overall production and economic activity, so typical signs include increased unemployment, a decrease in the inflation rate and bank failures and increased interest rates.

How should I behave?

Companies with low debt, good cash flow, and strong balance sheets are best to invest in for recession-proof investments. It is also important to remember that the economy always recovers eventually, and when prices are low, there are a lot of discounts and opportunities to buy stock for cheaper than you would otherwise be able to.

The Great Recession

After the housing market crash of 2007, the United States experienced a recession that lasted for 18 months and had a GDP decline of 4.3%. Although unemployment reached 10% and the government poured billions into emergency relief packages, the economy fully recovered and expanded for the next 10 years.


It is important to be prepared for recessions because they occur about every 4 years. This means it is important to invest in "recession-proof" securities and equip yourself with the knowledge to recognize when the economy is heading towards a recession.

What's Next On Investing?

Next Story: Volatility

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