Definition Of Recession Vs Correction

When people think of a crash today they look at the last two 2008 09 2000 02 as their guides.

Definition of recession vs correction. A correction is a drop of at least 10 in the price of a stock bond commodity or index. Naturally the financial markets are impacted by a recession which is why it has become a term that is used to define past times of market performance but a recession does more than just impact the financial markets like a bull market or a correction will do. During a correction prices fall significantly across a single asset industry or an entire market. If the recession persists and is particularly severe it may eventually be considered a depression.

The stock market has been active lately and for some it can be a bit unclear on how they should respond. Today ash of strong tower associates is talking to abc27 about the difference between a stock market recession vs correction and what they mean for you. A recession the term recession refers to an economic slowdown and happens when there are two consecutive quarters 6 months of negative gdp growth. Bear markets last much longer but don t come about nearly as often.

Since the market high stocks have dropped just shy of 10 which fits the definition of a correction but would still have to fall a considerable amount to change that sentiment to recession. A recession occurs when an entire economy contracts for several months. While the effects of a recession often cause the stock market to fall the term itself doesn t refer to a specific type of market activity. A correction refers to a fall in the overall stock.