The big question is, will we have a recession in 2022? Or you may be curious, what is a recession? A recession is when two negative quarters of GDP occur consecutively. Right now, it’s possible that we’ll have a negative GDP by the conclusion of Q2 2022. This would mean it will take another negative quarter to trigger a recession.

According to historical financial records, recessions happen about once every five years. When they occur, the average drop in the stock market is around 30% and can take up to a year to recover. Keep in mind the stock market is much different from the economy. The stock market is usually six months forward-looking from the economy, so we might already be in a recession from a stock market perspective. Fortunately, every recession is different and is not always severe. The market might only have a 30% drop within the timespan of a year and would most likely rebound. Recessions are healthy and are part of your overall financial plan so there is no need to panic.

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Matthews Barnett, CFP®, ChFC®, CLU®
Financial Advisor

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