Economic Recessions, Stock Market Corrections and High Inflation

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We meet the official definition of a market correction and the unofficial definition of a recession, and we’re close to the definition of high inflation. Market corrections can and have caused recessions. Be prepared for all three problems coexisting for many years.

Investors fear market corrections and often equate them to economic recessions, but as you’ll read in this article, the two are not the same. In fact, one can occur without the other. The third investor fear is high inflation. I discuss each fear, its current threat, and how to protect against it.


The National Bureau of Economic Research (NBER) defines a recession as "a period of falling economic activity spread across the economy, lasting more than a few months." The NBER is the private non-profit that announces when recessions start and stop. It is the national source for measuring the stages of the business cycle. In other words, we have a “recession” when the NBER says we have a recession. That said, the common, unofficial, definition is a decline in GDP growth that lasts consecutive two quarters, which happened in the first two quarters of 2022. Concisely, a recession is a reduction in economic activity. The American economy shrank an annualized 0.9% in Q2 2022, following a 1.6% drop in Q1, meeting the unofficial definition of a recession.