Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

W-Shaped Recovery

What it is:

A W-shaped recovery refers to two consecutive cycles of economic decline and growth that graphically resemble the letter "W."

How it works (Example):

A W-shaped recovery graphically expresses what is frequently termed a "double-dip recession."

In a W-shaped recovery, the first phase of economic expansion follow a recession does not last, and the economy falls back into recession relatively soon thereafter. However, the second recovery, shown as the right upward stroke of the W, does gain traction and long-term economic expansion persists.

Why it Matters:

A W-shaped recovery typically stems from an inherently volatile economic climate combined with inflationary pressures and a generally bearish outlook. Most analysts agree that a W-shaped recovery characterized the recession of 1981.