Rampant inflation, rising interest rates and retreating stock prices have a rising number of folks uttering the alarming "R" word. Given that our last recession ended only two years ago, investors may be forgiven if they feel like it's way too soon for another downturn. After all, historically speaking, it is.
The Pandemic Recession that began in February 2020 ended in April of 2020, according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), which is the arbiter of these things. Although it was the shortest downturn in U.S. history, the economy is still recovering from the nearly 21 million jobs that were lost during the slump.
And it continues to haunt us in other ways. After all, a recession is the scariest creature in the average investor's closet of anxieties. There's little wonder why. People fear recessions because they can mean lower home prices, lower stock prices – and, of course, unemployment. Any number of things can cause, or exacerbate, a recession: an exogenous shock, such as the COVID-19 crisis or the Arab oil embargo of 1973; soaring interest rates; or ill-conceived legislation, such as the Smoot-Hawley Tariff Act of 1930.