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.