Recession (Rezession)
A period in which a country's economic output shrinks, often for two quarters in a row.
In short
As of 8 October 2026A recession is a period in which a country's economic output shrinks. A common rule of thumb is a fall in gross domestic product for two quarters in a row. Companies earn less and unemployment often rises. Stock markets often fall before a recession and frequently recover before the economy grows again.
A recession is an economic downturn. A common rule of thumb: if gross domestic product shrinks two quarters in a row, it is a technical recession. Companies sell less, profits fall and unemployment often rises.
Stock markets usually react earlier, because they trade on expectations. Many bear markets coincided with recessions, and prices often recover before the economy grows again. Central banks often cut the key interest rate in a recession to support the economy. Weak quarterly results are an early signal.
Example: in the 2008/2009 financial crisis, German economic output fell by more than 5 % in 2009. Investors who stayed broadly diversified saw prices rise again in the following years, but there is no guarantee of that.
Related terms
As of 8 October 2026 · Educational content, not investment or tax advice.