07/19/2022
If you’ve been tuned into the news lately I’m sure you’ve seen headlines debating about whether we are headed for a recession or not, if we are already in one, or whether we should be worried about one at all. You might be asking yourself – What does this even mean? 😅
What is a recession? 🤔
A significant decline in economic activity that lasts for months or even years in some cases. Experts define it as when a nations economy experiences negative GDP, falling retail sales, increasing levels of unemployment, and contracting measures of income/manufacturing over a long period of time.
Recessions are considered an unavoidable part of the business cycle that is the regular pattern of expansion & contraction that happens in the economy
What causes a recession? 📉
- Sudden economic shock
- Excessive Debt
- Asset bubbles
- Too much inflation or deflation
- Technological change
What does this mean for me?
During a recession or a correction in the markets you may see investments in stocks, bonds, real estate and other assets drop in value. During a recession business owners could see fewer sales as cashflow for households is not as strong. If you have a longer term time horizon this is an opportunity for you to invest into quality companies at a discounted rate and you should continue to dollar cost average into your investment accounts. This isn’t the first market downturn and it won’t be the last in our lifetime, but we do know that all recessions in the past have been followed by the market hitting new all-time highs in the future!
