Recessions and the Stock Market

Recessions and the Stock Market

As economic growth has slowed measurably during the early part of 2022 from 2021’s torrid pace, investors have become increasingly concerned that the economy may be heading for a recession. Naturally, this has led to questions about how the stock market has fared during past recessions. In this brief commentary, I examine the performance of the US stock market in the months preceding, during and following past recessions.

The analysis covers the last 11 US economic recessions, the first of which started in 1953. I rely on the National Bureau of Economic Research (NBER) for the official start and end dates of the recessions. The NBER’s Business Cycle Dating Committee is generally accepted as the official arbiter of recessions and is responsible for assigning the dates associated with turning points in the economic cycle. The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

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Recessions and the Stock Market

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