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Understanding recessions are vital

Understanding recessions are vital

Recessions are part of the fabric of a dynamic economy. The average investor fears recessions because they mean lower home prices, lower stock prices, and less or no work.

Several things can cause, or worsen, a recession — soaring interest rates, or ill-conceived legislation. If you understand recessions, you will have many opportunities to look forward to when the recession ends.

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Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.

An inverted yield curve is a more solid predictor of economic downturns than the stock market, consumer confidence, or leading economic indicators index.

Historically, the best time to buy stocks is when the NBER announces the start of a recession.

A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment...

The recession of 1873 was known as the Great Depression until the 1929 recession started.

Since 1857, a recession occurred about every three-and-a-quarter years. The government used to think recessions should work themselves out.

The Federal Reserve does not want to start a recession because part of its dual mandate is to keep the economy healthy. But, the Fed's dual mandate also includes keeping inflation low. A cure for rising inflation is higher interest rates, which slows the economy.

Losing your primary source of income is the worst effect since jobs are increasingly hard to find in a recession.

The best thing to do with your money during a recession is to pay off your credit card debt.

The average length of recessions is 17.5 months. The long-term average covers the 1873 recession that lasted 65 months. It also includes the Great Depression, which lasted 43 months.

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