💵 A recession is a broad and sustained decline in economic activity. This can be seen in GDP, employment, industrial output, consumer spending, and investment.

📝 Historically, the US has experienced 12 recessions since World War II. On average, their duration is about 10–11 months. The longest recession was the Great Recession of 2007–2009 (18 months), while the shortest was the COVID-related downturn in 2020 (2 months, but it set a record for depth).

⚡️ Key characteristics to watch:

🟠 GDP contracts for several quarters.
🟠 Unemployment rises, usually with a lag.
🟠 Consumer spending, which accounts for ~70% of US GDP, declines.
🟠 Credit markets tighten, and business investment falls.

🕯 For traders, recessions reshape the entire market. Cyclical stocks stall, while defensive stocks tend to hold up better. Safe-haven assets like USD, gold, and US bonds attract capital flows, while oil and industrial metals are typically pressured. Volatility increases across all asset classes.

💡 The nuances! Markets anticipate recessions. They often fall before the economy is officially declared in recession and recover before the data improves. That’s why monitoring early signals such as the yield curve, PMI, or credit spreads is so important.
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