A period when the economy slows down significantly. People lose their jobs or are laid off, they spend less, and that hurts profits for businesses. It often (but not always) comes with falling investment prices too. Recessions feel rough but are a normal part of economic cycles, and throughout history, they’ve always ended.
- SpendingSlows down
- ProfitsShrink, some payouts cut
- PricesOften fall
- RecoveryHas followed
Walk through the numbers
During a recession, companies may earn less, some cut dividends and stock prices often fall. Recessions have historically been followed by recoveries, though no one can time either one.
Recessions are when an emergency fund and a long time horizon matter most. They let you keep investing instead of selling.
Related terms
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.