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Recession or not? Here are 35 economic terms to know in 2023

What *is* a recession, exactly? Slowcession? Richcession? Let's parse the terminology of uncertain times.

Navigating a recession that may or may not come. (Photo by Pexels user George Morina via a Creative Commons license)

This editorial article is a part of Navigating a (Possible) Recession Month 2023 in Technical.ly’s editorial calendar.

Is 2023 going to see the return of a full-blown recession? Economists’ opinions vary, with no clear answer just yet.

How you should respond to that threat is also up for debate. Last month, Sergiu Matei, the founder and CEO of Index.dev, a platform for hiring remote software workers, expressed little concern — at least for technologists.

“I don’t see this being very traumatic for tech,” Matei told Technical.ly. “This could be the most advertised recession that never comes.”

Still, the high housing costs, big grocery bills and mass tech layoffs we saw in 2022 seem to signal that something is not right with the economy, reminding us that we’re not that far out from the 2020 economic shutdown caused by the COVID-19 pandemic. Are we in recovery mode or headed for a fall?

We at Technical.ly don’t know any more than anyone else, but we can help you navigate the possible recession in a moment that brings economic terminology that you probably recognize, but may not fully understand. Do you really know what a recession even is? Or inflation?

We’ve compiled a (potential) recession glossary, based on past Technical.ly reporting and sources from the US government, Market Watch, The Conversation and the elsewhere. Here are 33 terms you’ll come across in articles about the economy and what they mean:

Cryptocurrency

A decentralized digital currency that relies on secure ledger technology called blockchain to keep ownership and transfer records, often with little to no information about the identity of the owner. Cryptocurrency, unlike the dollar, is traded outside of a central banking authority and is for the most part unregulated. Because of that, crypto was long considered to be recession proof, though recent history has shown that economic downturns can impact the value of crypto. Types of cryptocurrency include Bitcoin, Ether, Litecoin and digital assets like NFTs.

Deflation

The opposite of inflation, deflation is when prices fall due to a recession causing the gross domestic product to fall. While lower prices sound like a positive thing, deflation can lead to an economic crash, especially in the housing market.

Dividends

A company’s regular profit-sharing payments to investors. The amount is determined by the company’s board of directors and may be given as cash or stocks.

Dow Jones Industrial Average

A stock market index made up of 30 of the largest publicly owned US companies.

Economic bubble

An economic cycle where the price of assets inflates rapidly. It may be followed by an economic crash if market value decreases abruptly.

Federal Open Market Committee (FOMC)

The policymaking body of the Federal Reserve System. It meets eight times a year to set the target federal funds rate.

Federal Reserve System

The central banking system of the United States of America, commonly referred to as the Fed. The Fed monitors financial institutions, promotes consumer protection and sets target interest rates, which impact the rise and fall of the stock market.

Final goods and services

Finished products that will be purchased by the end user and not resold. These are what the gross domestic product measures.

Gross domestic product (GDP)

GDP measures the monetary value of all of a country’s final goods and services during a in a given period of time.

Hard landing

An abrupt economic downturn or flattening after rapid growth, usually following government intervention, which can trigger economic crises like a stock market crash. Contrast with soft landing.

Housing market bubble

A type of economic bubble in which temporary periods of high demand and low supply in the housing market leading to high housing costs, leading to buyers taking out a high level of debt. This can lead to a housing market burst.

Housing market burst

A potential consequence of an housing market bubble, where demand for housing drops due to extreme housing costs, causing housing costs to drop, with home values potentially falling well below the mortgage debt owed.

Inflation

An increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services, reducing the purchasing power of money.

Labor market

Also known as the job market, it’s the supply and demand for labor.

Layoffs

Job termination, sometimes on a large scale, that is no fault of the employee. Layoffs are usually caused by a lack of available work or company budget cutbacks. It’s sometimes used interchangeably with the term “fired,” or termination which may or may not be the fault of the employee. Layoffs may be temporary or permanent, and laid off employees are in most cases entitled to unemployment benefits.

Market cap

Market capitalization, or the value of a company that is traded on the stock market. The value is calculated by multiplying the total number of shares by the current share price.

Money market account

A deposit bank account, similar to a savings account, but with higher interest rates. In general, money market accounts have a minimum balance and limit the number of withdrawals per month, and are lower risk than other investments.

NASDAQ/Nasdaq

The NASDAQ (National Association of Securities Dealers Automated Quotations) is a the second-largest stock exchange in the world, known for its online trading platform. The NASDAQ is home to many technology and internet-based companies and for fast trading.

New York Stock Exchange (NYSE)

The largest stock exchange in the world.

Rally

A temporary spike in stock prices, often caused by new economic policies. A rally may last a day or two or up to a couple of months

Recession

A period of economic downturn, typically characterized by declining GDP, high unemployment and a lack of growth.

Richcession

Coined by the Wall Street Journal, a richcession is when a recession impacts the wealthy more directly than people with modest or low incomes, an inversion of a typical recession. Since mass layoffs in 2022 disproportionately impacted high-earning tech jobs, while the employment rate across the board is strong, a potential 2023 recession may cause more disruption to high earners.

Risk assets

An asset you purchase that carries risk that the value may drop and you will lose money. Common high-risk assets include stocks, cryptocurrency, real estate and the global currency trade.

S&P 500

Standard & Poor’s 500 Index, commonly written as S&P 500, is a market cap weighted index of 500 leading publicly traded companies in the U.S.

Slowcession

Coined by economist Cristian deRitis, a slowcession is a period when economic growth slows but does not reach the point of going in reverse. Similar to stagflation.

Soft landing

Slow economic recovery that avoids a recession, and what the Fed is aiming for by raising interest rates to curb inflation.

Stagflation

An economic cycle with slow growth combined with inflation and a high unemployment rate. It differs from a recession in that during stagflation, the economy is stagnant, while during a recession the economy goes backward, or recedes. In July 2022, Forbes predicted that the US may be entering a period of stagnation, but so far it has not happened.

Stocks

A type of investment in a company where you buy shares, also known as equities, of ownership. As the value of the company increases or decreases, so does the value of the stock.

Stock market crash

The most common cause of a recession, a stock market crash is a significant and sudden decline of stock prices by 10% or more in one day, often caused by sudden mass panic selling. The 2020 and 2022 stock market crashes were caused by the COVID-19 pandemic, and are a big reason a recession has been predicted by some economists. NASDAQ predicts that the stock market may recover from the 2022 crash without a recession, however.

Stock market index

A stock market index is a statistical measure of the change in the value of a portfolio of stocks, representing the performance of a specific market segment. These values are commonly represented by real-time scrolls, line graphs and graphs. Some of the most well-known stock market indexes include the S&P 500, the Dow Jones Industrial Average, and the NASDAQ Composite.

Supply chain disruption

The supply chain is the flow of production of products and services, which a healthy economy relies on. The COVID-19 pandemic caused disruptions — for example, international shipping was delayed and in some cases factories closed temporarily. These disruptions caused shortages of things like baby formula, fuel and pet food over the last couple of years. As we enter 2023, there are shortages of children’s over-the-counter medicine and vehicle chips, but it’s predicted that we’ll see fewer shortages in the year to come.

Target interest rate

The target interest rate, set by the FOMC, at which commercial banks borrow and lend their excess reserves to each other overnight. This rate, which is set eight times a year, impacts the amount of interest you pay on loans, as well as the amount of interest you earn in savings and money market accounts.

Treasury yields

The interest rate on US government bonds, which is the interest rate the government pays on its debts.

Unemployment rate

The number of unemployed people as a percentage of the labor force (which includes both the employed and unemployed). The unemployment rate is calculated as: (Unemployed ÷ Labor Force) x 100. The US is entering 2023 with an unemployment rate of about 3.5%, which is considered low. While a low unemployment rate is a good thing, it’s possible for rates to drop so low that they cause an economic imbalance, causing inflation to spike.

US government bonds

Government bonds, also known as savings bonds, are a low-risk type of investment where you lend money to the U.S. government and it pays it back to you with interest.

Series: Navigating a (Possible) Recession Month 2023
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