What Is A Recession?

What kind of a recession are we in?

'What is a recession?' is a question that is asked with increasing frequency of late, but merely looking the word up in an online dictionary only gives you half the answer.

Why is that so?

Because you are not looking it up out of sheer curiosity. You don't just want to know what a recession is, you want to know what if anything you can do about it, and what the best course of action is for your individual situation.

This page is designed to at least point you in the right direction in answering these questions.

Textbook Definition

The 'textbook definition' for a recession is "two consecutive quarters of negative economic (i.e., real Gross Domestic Product) growth." This is the definition most often cited in the news, but the US National Board of Economic Research (NBER), the government body that officially calls recessions, has a longer, vaguer, and more complicated definition:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.

(You can see the weasel-terms "more than a few" and "normally" here.)