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What Is a Recession?

Written by Jasir Jawaid

In the U.S., the stock market downdraft continues unabated, inflation is creeping higher, forcing the Federal Reserve to raise borrowing costs, and weekly jobless claims reached a four-month peak. However, there's a glimmer of hope: the job market and spending remain robust.

Still, questions have begun to swirl if the U.S. is headed toward a recession. Wells Fargo CEO Charles W. Scharf said there was "no question" the country was barreling towards a recession. Former Federal Reserve Chairman Ben Bernanke warned of "stagflation" — a high unemployment rate and high inflation. And former Goldman Sachs CEO Lloyd Blankfein said recession risks were "very, very high."

A recession is a natural component of the business cycle, even though it is highly unwelcome. Companies going out of business, a collapse of the financial system, stagnant or declining industrial production, and rising unemployment are the hallmarks of a recession. Even while the economic suffering brought on by recessions is only brief, it may significantly impact an economy in the long term.

This article appeared on JoyWallet and can be read here in full.


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