A close cousin to a bear markets is a recession. Recessions don’t always begin and end in lockstep with bear markets, but there’s no denying the connection between the two. Of course, right now we’re experiencing both a recession and a bear market, and the combined effects have been overwhelming for many people. It’s important to understand exactly what a recession is. A recession is identified by an organization called the National Bureau of Economic Research, which bases its determination on significant declines in industrial, production, employment, real income and wholesale-retail trade.
Recessions, as unpleasant as they can be, are fairly common. Since World II, there have been 10 recessions, each lasting between 6 and 18 months.
Because they are based on past data, recessions are not officially confirmed until months after they begin. That applies to our current recession. It started in December 2007, but wasn’t confirmed until this past December – a year later. If history is a barometer, we might only have a few months left in this recession.
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