Recession

A recession is a contraction in economic activity. It is officially defined as two consecutive quarters of negative gross domestic product growth, though the term is also used more loosely to describe any significant slowdown. During a recession, businesses produce less, hire fewer people, and consumers spend less. The opposite of a recession is expansion, when the economy grows.

A recession affects household income and job security. Unemployment rises as companies reduce payroll, and those still employed may see wages stagnate or benefits cut. The value of investments typically falls. Borrowing becomes more expensive as central banksTermCentral bank×البنك المركزيThe government's bank, which controls the money supply, sets interest rates, and oversees all other banks in the country.Open the term and lenders tighten credit. On the other hand, a recession can reduce inflationTermInflation×التضخّمA general rise in prices over time, so one riyal today buys less than it did a year ago.Open the term, which improves purchasing power for those holding cash or earning fixed incomes. The severity and duration vary widely: some recessions last a few months, others stretch for years, and the impact on any individual household depends on their employment sector, savings, and debt.

• A recession is measured by GDP, not by how people feel. Sentiment can lag the data by months.
• Recessions are not uniform across sectors. Some industries contract sharply while others grow.
• Job losses typically lag the start of a recession and continue after growth resumes.
• Asset prices often fall during recessions, which affects anyone holding stocksTermStock×السهمA share of ownership in a company, bought and sold on a stock exchange, that may pay dividends and rise or fall in value.Open the term, bonds, or real estate.