What is a Recession?

No one likes the "R word," but recessions are a normal part of the economic lifecycle.

The term “recession” evokes negative feelings, especially for those who were hit hard by the market crash in 2008, but what some people don’t know is that any two consecutive months of negative economic growth qualifies as a recession.

In fact, not everyone agrees on when a recession begins. But it is characterized by reduced production, retail sales, higher unemployment and declining incomes. The National Bureau of Economic Research, a non-profit in Cambridge, MA, officially declares when we enter and exit a recession.

Since WWII, there have been 12 recessions in the United States with an average duration of 10 months.

Companies that weather recessions the best are those with low debt, strong cash flow and balance sheets.

Recessions are a normal part of the economic lifecycle, that act like book ends to periods of strong economic growth.