Recession
A significant, widespread decline in economic activity lasting more than a few months, often defined as two consecutive quarters of negative GDP growth.
Example
The two-consecutive-quarters-of-negative-GDP-growth rule of thumb is a simplification — the body that officially dates US recessions actually weighs employment, income, and spending data together, not GDP alone.
Common Misconception
A recession and a bear market don't always move in lockstep — stock markets are forward-looking and often fall before a recession is confirmed, and can start recovering before the recession officially ends.
Why It Matters
Recessions typically bring layoffs and tighter credit, part of why an emergency fund and manageable debt levels matter more in the years leading up to one than trying to predict exactly when it will start.