What’s a recession?

What's a recession - and why does the word scare the bejeezus out of our parents and grandparents?

What's the key learning?

A recession is when the economy shrinks (aka Australia's GDP is negative) for two or more consecutive quarters
Recessions are often associated with job losses, store closures and construction halts
Australia entered a recession in 2020 (for the first time in over 30 years). Before that, there was the Great Depression in the 30s, a recession in the early 80s and again in the early 90s.

What do you think of when you hear the word Recession?

There’s gum recession, hair recession, the GREAT recession. None of these are particularly ideal.

But what is a recession - and why does the word scare the bejeezus out of our parents and grandparents?

Well, it’s quite simple. Recessions are often associated with job losses, store closures and construction halts.

So how do we get ourselves into a recession?

A recession is when the economy shrinks (aka Australia's GDP is negative) for two or more consecutive quarters.

And what triggers negative GDP?

It could be due to events like:

A global pandemic (thanks, COVID)
Weather disasters (think hurricane Katrina, the bushfires of January 2020)
Low interest rates
High household debt

Okay.. so let’s say we go into a recession - what happens now?

Like we mentioned, Flux fam, a recession generally ain’t pretty. You’ll see things like:

Businesses start to fold
People losing their jobs
Households unable to pay their bills
Discretionary spending completely off the cards

Has Australia had a recession?

Yep. In fact, we entered a recession in 2020 (for the first time in over 30 years). Before that, there was the Great Depression in the 30s, a recession in the early 80s and again in the early 90s.

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