Hard Landing

A hard landing is when an economy slows down so sharply and suddenly that it tips into recession—a period of negative growth and rising unemployment. You'll hear economists and investors debate this constantly, especially when interest rates are rising, because a hard landing can tank stock prices and hurt people's jobs and savings. The opposite is a "soft landing," where the economy cools down gradually without crashing. For example, if the Federal Reserve raises rates aggressively to fight inflation and companies start laying off workers en masse, investors might worry about a hard landing and sell stocks. It matters to you because recessions affect job security, investment returns, and your overall financial health.