What typically occurs during a recession?

During a recession, a decrease in overall economic activity is a defining characteristic. This period is marked by a slowdown in various economic indicators, such as a drop in consumer spending, reduced business investment, and a decline in production levels. Consequently, this reduction in economic output often leads to higher unemployment rates, as businesses cut back on hiring or lay off workers to manage costs during times of lower demand.

In contrast, an increase in consumer confidence, rapid growth in employment opportunities, and a significant rise in stock market values are typically associated with an economic expansion or recovery, not a recession. During a recession, consumer confidence tends to decrease as individuals and families become more cautious with their spending due to uncertainty and potential job loss. This caution further exacerbates the decline in economic activity, creating a cycle that is challenging to break.