Chime® is a financial technology company, not a bank. Banking services, credit, and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

What Is a Recession?

Chime Team • March 26, 2024

Recession

A recession represents a significant decline in economic activity across the board that lasts for a period of several months. It is officially recognized when an economy experiences two consecutive quarters of negative gross domestic product (GDP) growth. Beyond GDP, recessions can also be seen through declines in income, employment, industrial production, and retail sales.

Recent Examples of a Recession

Here are two recent examples of a recession:

  • The Great Recession (2007-2009): Triggered by the bursting of the housing bubble in the United States, The Great Recession led to a severe banking crisis and subsequent deep economic downturn.
  • COVID-19 Recession (2020): Unlike typical recessions, this was prompted by a global pandemic, causing unprecedented economic contractions due to lockdowns and reduced consumer spending.

Recognizing signs of a recession can prepare individuals and businesses to brace for economic hardship by fostering resilience through savings, diversified investments, and prudent financial planning. For policymakers, understanding recessions is vital for implementing timely interventions, such as stimulus packages or adjusting interest rates, to cushion the economy.

Common Challenges During Recessions

During recessions, certain challenges are common:

  • Unemployment rates typically soar, posing threats to stable employment.
  • Volatility in the markets can erode the value of investments and retirement savings.
  • Banks may tighten lending criteria, making it harder to secure loans.

Understanding recessions enables people to navigate economic downturns more effectively. For example, you can build an emergency fund to provide a financial cushion, spread investments across different asset classes to mitigate risks, or tighten your budget to help stretch financial resources further during tough times.

Recessions are part of the economic cycle, characterized by periods of expansion followed by contraction. They can reshape industries, influence government policies, and alter consumer behaviors. By studying past recessions, individuals and policymakers can glean insights into effective strategies for mitigating the impacts of future downturns.

Negative GDP growth, declining income, and rising unemployment all happen in a recession.

A recession is more than just a temporary economic setback; it is a complex event that impacts nearly every aspect of the economy. From job security to personal investments, understanding the dynamics of recessions is essential for effective financial planning and resilience building.

By cultivating financial literacy and planning ahead, people can navigate the uncertainties of recessions with greater confidence and security.

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

‡ SpotMe® for Credit Builder is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

Address: 101 California Street, Floor 5, San Francisco, CA 94111, United States.

No customer support available at HQ. Customer support details available on the website.

© 2013-2024 Chime Financial, Inc. All rights reserved.