Business Dictionary
Recession
Definition
A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
Deep Dive
A recession is a significant and widespread decline in economic activity across an economy, typically identified by a fall in Gross Domestic Product (GDP) in two successive quarters. However, the official determination of a recession often considers a broader range of indicators, including industrial production, employment levels, real income, and wholesale-retail sales, to ensure the downturn is persistent, pervasive, and pronounced. It marks a period where economic growth stagnates or reverses, leading to a contraction in overall output and commercial activity.
Examples & Use Cases
- 1The Great Recession of 2008-2009, triggered by the subprime mortgage crisis, which led to a global economic downturn, widespread job losses, and significant business failures
- 2Many countries experienced a technical recession in 2020 due to the abrupt global economic shutdown caused by the COVID-19 pandemic and associated lockdowns
- 3A regional economy entering a recession after its dominant manufacturing industry faces a severe decline, resulting in mass layoffs and reduced local spending power
Related Terms
Economic DownturnDepressionContraction