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Recession information: What is recession?
Recession is defined as a period of reduced economic activity. More specifically, in
economics, recession is defined as the reduction of a country’s gross domestic product
(GDP) for at least two quarters.
There are of course many definitions for recession. The common theme perhaps in all these
is that recession is usually associated with significant decline in economic activity across
many sectors, resulting in slow down in GDP growth, personal income, and higher
unemployment rate. Some economists, for instance, prefer to define recession as a 1.5%
rise in unemployment within 12 months.
The 2008-2009 downturn is considered a recession under almost all definitions:
Economists disagree on how long the downturn is likely to last. Generally, if the recession
is very severe (e.g., associated with GDP decline of 10%) or last longer than 3-4 years, it is
referred to as depression.
Recession is defined as a period of reduced economic activity. More specifically, in
economics, recession is defined as the reduction of a country’s gross domestic product
(GDP) for at least two quarters.
There are of course many definitions for recession. The common theme perhaps in all these
is that recession is usually associated with significant decline in economic activity across
many sectors, resulting in slow down in GDP growth, personal income, and higher
unemployment rate. Some economists, for instance, prefer to define recession as a 1.5%
rise in unemployment within 12 months.
The 2008-2009 downturn is considered a recession under almost all definitions:
- Private consumption has fallen for the first time in more than 2 decades.
- Consumer confidence is very low.
- Unemployment rate has risen from regular 4-5% to 8.5% as of March 2009, and is
- In November 2008 employers eliminated 533,000 jobs, the largest single month loss
- Third quarter 2008 saw a 6.4% decline in spending on non-durable goods (e.g.,
- The National Bureau of Economic Research stated in December of 2008 that the U.
S. has been in a recession since December 2007.
Economists disagree on how long the downturn is likely to last. Generally, if the recession
is very severe (e.g., associated with GDP decline of 10%) or last longer than 3-4 years, it is
referred to as depression.
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