- "L" shaped Recession
A L-shaped recession describes a recession that falls quickly and fails to recover. An L-shaped recession is a worst-case scenario because they offer no hope of recovery. The Japanese recession that began in the early 1990s is considered an L-shaped recession.
- "U" shaped Recession
- "V" shaped Recession
- "W" shaped Recession
A W-shaped recession begins like a V-shaped recession but then ends up turning back down again after showing false signs of recovery. W-shaped recessions are also called "double-dip recessions" because the economy drops twice before a full recovery is achieved. A W-shaped recession is painful because many investors who jump back into the markets after they believe the economy has found a bottom end up getting burned twice---once on the way down and then once again after the false recovery. The recession of 1980 that double dipped in 1981 and 1982 is a great example of a W-shaped recession.
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