Recession (economics)

Terminology

The terms recession and depression are used colloqually to describe any deep or persistant decline in economic activity, (and sometimes to a persistant reduction in the rate of growth of ouput). More precise definitions have been adopted the statistics authorities. In the United States the National Bureau of Economic Research defines a recession as

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

Other authorities have not adopted a formal definition of recession but most commentators and analysts use

a period of of negative growth of real (inflation-adjusted GDP lasting for at least two quarters]].

The term "double-dip recession" refers to a second fall in economic growth following an aborted recovery from a recession, such as occurred in the 1937-39 phase of the Great Depression. The terms "downturn", and "trough" are used to denote the onset of negative growth, and the point at which positive growth resumes.

Before 1930, what are now termed recessions were referred to as "depressions". That term is nowadays reserved for exceptionally severe or prolonged recessions. Again there is no formal definition, but it has been suggested that the term be applied to a decline in real GDP that exceeds 10%, or one that lasts more than three years.