You always hear the connection between recessions and stock markets. I understand a recession would trigger the stock market to plunge. But I don’t understand why and I also don’t understand the timeline of events of a recession and what’s happening with the U.S. economy overall during a recession.
In: Economics
Recessions are when people aren’t making things because they can’t find a job or the right job for their skills. The stock market is basically a guess as to how much value people’s jobs will bring in the future. So when you have a lot of people that can’t find jobs and it happens really fast you will get a dip in the stock market.
Since the stock market is a guess though people could be working the exact same amount but if investors thought there was going to be more production (profits) and there aren’t then that can also cause the market to go down but it’s not connected to the actual work people are doing.
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