Recession Definition

Saturday, August 6 by Lara Stewart

Having an accurate recession definition can be a big help when trying to understand the current state of the economy. You may remember hearing commentators asking repeatedly whether the United States was in a recession a few years ago. This can be confusing if you do not know recession's definition. "Recession" is not merely a word that refers to a rough economic time. It is a word that refers to a specific set of economic circumstances. So, even during times of high unemployment, housing crises and inflation, the country may not, in technical terms, be in a recession.

Recession's definition is two consecutive quarters of negative economic growth. In other words, the country's gross domestic product must shrink for two three month periods. This definition is why it takes time for a recession to be officially declared. Recessions, in general, last from six to twelve months. Longer periods of negative growth are considered depressions. During a recession, you will usually see unemployment climb, housing prices fall, and a drop in the stock market.

Generally, people will blame the federal government, especially the head of the Federal Reserve and the President of the US, for a recession. However, a recession will usually have more than one cause, and no one event can be blamed for a recession. As countries' economies become further intertwined, financial difficulties in one country can easily spread to another, as well.

The end of a recession is not necessarily correlated with a return to prosperity for all. For instance, when the 2008 – 2009 recession had technically ended, the United States and other countries were still experiencing high levels of unemployment.

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