Recession

A recession is an official economic contraction. The most commonly cited definition is two consecutive quarters of negative GDP growth, though in the U.S., the National Bureau of Economic Research (NBER) uses a broader assessment including employment, income, industrial production, and consumer spending. Recessions typically last 6–18 months.

During recessions, unemployment rises, corporate earnings fall, consumer spending contracts, and credit tightens. Not all recessions create bear markets, but deep recessions usually do. The 2008–2009 recession caused a 57% market decline; the 2020 COVID recession caused a 34% decline but recovered in months.

Example: The U.S. has experienced approximately 13 recessions since 1945, lasting an average of 10 months each. Despite this, the S&P 500 has returned an average of roughly 10% per year over long time periods — meaning investors who stayed invested through recessions vastly outperformed those who tried to time them.

BMInsider tracks recession indicators through multiple data points reflected in the Fear & Greed Index, and portfolio risk analysis in our Portfolio Tracker helps you understand your exposure to recession-sensitive sectors.