During a global recession, a region’s economic output slows down or declines for several months or even years. It may also experience dramatic shifts in commodity prices, which could affect what you pay for certain products and services. In general, these periods can lead to higher unemployment rates, lower consumer confidence, and decreased household wealth.
The severity of a global recession varies based on each country’s economic interconnectedness, its degree of dependence on foreign trade and investment, and its own resilience to shocks. According to the IMF, a recession takes place when macroeconomic indicators such as GDP drop for a sustained period of time. The most common indicator is a decline in gross domestic product (GDP), which measures the total value of goods and services produced in a country during one year.
In the aftermath of the Great Recession, which lasted from Q3 2008 to Q1 2009, many governments implemented quantitative easing programs to stimulate growth. Although these efforts have helped economies rebound, their effects can linger years after they’re completed.
Research suggests that being exposed to a recession during a critical transitional period in life, such as right when you’re finishing school or entering the workforce, can have long-lasting psychological or behavioral consequences. For example, those who enter the labor market during a recession tend to experience slightly lower mortality rates than their peers in the same age group, which is likely due to fewer fatal car accidents caused by reduced traffic.