A recession can be one of the most challenging phases of the economic cycle. It affects everyone—from big businesses and governments to everyday people managing their household budgets. But what exactly is a recession, and how can you prepare for one before it affects your financial life?
Let’s explore what a recession means, how it impacts the economy, and practical steps you can take to protect yourself and your finances.
What is a Recession?
A recession is typically defined as a significant decline in economic activity across the economy that lasts for a period of time—usually two or more consecutive quarters.
During a recession, we may see:
Decreased consumer spending
Slower business growth
Job losses or higher unemployment
Reduced industrial production
Lower income and confidence among consumers and investors
Recessions are a natural part of the economic cycle, though they can vary in length and severity.
What Causes a Recession?
Several factors can trigger a recession:
High inflation that reduces purchasing power
High interest rates that make borrowing expensive
Financial crises such as bank failures
