Recession
A significant economic contraction — commonly defined as two consecutive quarters of negative GDP growth — that hits corporate earnings and risk assets hard.
A recession is a period of significant economic decline across the economy. The technical rule of thumb is two consecutive quarters of negative GDP growth, but the U.S. National Bureau of Economic Research (NBER) uses a broader assessment of employment, income, production, and sales.
Recessions compress corporate earnings, raise unemployment, and force central banks toward rate cuts. They are typically negative for cyclical equities, credit spreads, and commodity-linked assets, while government bonds and defensive sectors often outperform as investors seek safety.
Related Terms
Business Cycle
The recurring sequence of economic expansion, peak, contraction, and trough that drives sector rotation, earnings cycles, and asset class returns.
IntermediateConsumer Confidence
A survey-based measure of households' optimism about the economy — a leading indicator of consumer spending, which drives ~70% of U.S. GDP.
BeginnerDeflation
A sustained fall in the general price level — the opposite of inflation — that can signal a collapsing demand environment.
IntermediateGross Domestic Product (GDP)
The total monetary value of all goods and services produced within a country in a given period — the headline measure of economic size and growth.
BeginnerHard Landing
The painful outcome when aggressive monetary tightening overcorrects and tips the economy into recession.
IntermediateJobless Claims
Weekly count of people filing for unemployment benefits — the highest-frequency read on labor-market health.
BeginnerPurchasing Managers Index (PMI)
A monthly survey of business activity across manufacturing and services — a leading indicator that moves markets before hard data arrives.
IntermediateRisk-Off
A market sentiment regime where investors flee to safety — selling equities and high-yield assets in favor of government bonds, gold, and haven currencies.
BeginnerSoft Landing
The ideal macro outcome: the central bank tames inflation through rate hikes without triggering a recession — rare but market-moving when achieved.
IntermediateStagflation
The toxic combination of high inflation and stagnating economic growth — the worst macro environment for central banks and equity markets.
IntermediateUnemployment Rate
The share of the labor force actively seeking work but unable to find it — a key input to central bank employment mandates.
BeginnerYield Curve
A graph of Treasury yields across all maturities — from 3 months to 30 years — that maps the term structure of interest rates at a given moment.
Intermediate