What are recessions?

A recession is when a country’s economy slows down and people have less money to spend.

Imagine you have a lemonade stand. You make lots of money during summer because everyone wants lemonade. But when winter comes, fewer people buy your lemonade, so you earn less money. That’s like what happens in a recession, instead of a lemonade stand, it's the whole country, and instead of just one season, it's for a few months or even years.

During a recession, businesses might have to lay off workers because they aren’t selling as much. That means some people lose their jobs or get fewer hours at work. When that happens, families may need to cut back on things like going out for ice cream or buying new toys.

Sometimes, the price of things we buy, like groceries or clothes, goes up during a recession, which makes it even harder to save money.

Just like how your lemonade stand gets busy again when summer comes around, a country's economy can get better too. People start spending more, businesses hire more workers, and everything starts feeling brighter again, just like the sun coming out after a rainy day.