“Bear markets” are when stocks drop at least 20% from their recent peak. They’re rare, but signal to economists that the economy is on a downward spiral. But what does this mean for everyday investors?
Many of us remember the “great recession” of 2008 – Americans lost jobs, houses, and trillions of dollars in investments.
Bear markets often lead to a recession period – which means high inflation, high unemployment, and crumbling investments. Though stock market downturns are not a guarantee of a recession, they often occur at the same time.
The last bear market lasted just six months before the market fully recovered, but this new bear market period is predicted to last much longer. Should we seriously be worried about a recession?
For now, the market doesn’t guarantee a recession. The unemployment rate is at its lowest in decades, and the American economy has regained over 22 million jobs that were lost during the height of the pandemic.
Bear markets are a major indicator that the economy is in a downturn. However, there is no need to fall into financial hopelessness yet – as a recession is not set in stone.