L-Shaped Recovery

DEFINITION of 'L-Shaped Recovery'

A type of economic recession and recovery that resembles an "L" shape in charting. An L-shaped recovery represents the shape of the chart of certain economic measures, such as employment, GDP and industrial output. An L-shaped recovery involves a sharp decline in these metrics followed by a long period of flat or stagnant growth.

BREAKING DOWN 'L-Shaped Recovery'

Many refer to the 1990s-era in Japan as a classic example of an L-shaped recession, where there was an economy that essentially flatlined for a decade. There are countless other shapes a recession and recovery chart can take, including V-shaped, W-shaped, U-shaped and J-shaped. Each shape represents the general shape of the chart of the economic metrics that gauge the health of the economy.

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