A recession is a period when the wider economy shrinks for a meaningful stretch of time. Output, jobs, incomes and spending all tend to weaken together. Definitions vary by country and statistician, but the practical meaning for investors is the same: corporate earnings face pressure and risk appetite usually falls.
Key takeaways
- A recession is economy-wide weakness, not one bad company report.
- Unemployment often rises and credit conditions can tighten.
- Share markets sometimes fall before the recession is officially recognised.
- Defensive cash buffers and diversified holdings matter more when growth turns down.