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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is a Double-Dip Recession?

A double-dip recession occurs when the economy experiences a recession followed by a brief recovery and then another period of recession.

How Does a Double-Dip Recession Work?

Recessions occur when the gross domestic product (GDP) declines for two consecutive quarters.

In the case of a double-dip recession, also known as a W-shaped recession, the downturn is followed by a period of recovery and then another extended downturn.

In many cases, the second downturn may be caused in part by job layoffs and spending cutbacks from the previous recession, leading to downturns in the demand for goods and services.

Why Does a Double-Dip Recession Matter?

Double-dip recessions are particularly troublesome because they signal a lack of confidence from consumers and businesses in the economy's ability to recover from the previous recession. Additionally, recovery from the second dip may take longer.

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