What is a recession? | CNBC Explains?

A recession is when the grown-up world slows down, just like how your toy car might go slower if you push it gently instead of giving it a big push.

Imagine you and your friends are all selling lemonade in the park. Everyone has their own stand, and they're all happy because people keep coming to buy lemonade. That’s like the economy being strong, everyone is working and earning money.

But one day, fewer people come to buy lemonade. Some of your friends decide to close their stands because they’re not making enough money anymore. That's a recession, it's when businesses slow down, jobs might disappear, and people earn less money.

Sometimes, the economy slows down like how a toy car might stop if you take your hand off the push. A recession can happen when grown-ups are worried about their money, or when big companies have trouble, which makes everyone else feel it too.

During a recession, parents might need to work more hours, and kids might get fewer treats, just like how lemonade stands might close if no one buys enough lemonade.