For many adults, this is the first time that they’ve experienced a drawn-out economic slowdown—one in which jobs are harder to find and financial choices are more difficult. A global recession would mean synchronized declines across interconnected economies, with effects felt by people in all countries and income groups. The onset of a global recession depends on a number of factors, including the extent to which a country relies on its trading partners for trade and investment and how much it is impacted by the actions of other large economies.
A recession typically starts when a region’s economy slows down, usually for several months or even years, as the value of goods and services falls and consumers are less willing to spend. It can also result from dramatic changes in prices of commodities like oil or a shift away from consumption of goods and services previously considered essential.
It can be hard to identify when a global recession begins, as GDP data is often reported at an aggregate level and may not include all major economies. In addition, a recession can take several years to end—even after it begins—and it’s important to keep in mind that the average duration of a global recession is just under two years.
The global economic crisis of 2008 began with a collapse in the housing sector, as US house prices fell and borrowers became unable to afford their mortgage payments. In addition, monetary policy tightening in several developed economies led to stress in financial markets.
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