What is recession mentality?

Recession mentality refers to a psychological state where individuals and businesses adopt a conservative and cautious approach to spending and investment during economic downturns. This mindset often leads to reduced consumer confidence, increased savings, and decreased willingness to take risks, as people anticipate economic hardship. Such behavior can further exacerbate economic slowdowns, as diminished spending can lead to lower demand for goods and services, creating a self-perpetuating cycle of recession.