A recession as defined by The National Bureau of Economic Research (NBER) is a period of significant decline in economic performance (negative growth) spread across the country. This decline usually lasts for more than a few months. This is shown in measurements of real income, employment, industrial production, wholesale-retail sales and GDP. A recession is declared by the NBER.
For the most part our macroeconomic trends move towards long term growth. Still, there are short-term fluctuations that occur during major macroeconomic slowdowns. This is part of a normal process in the business cycle, albeit an unpleasant one. We can expect to see negative growth in production. Higher unemployment, as well as business failures across all industries. Fortunately, they typically do not last long. Our most recent trend has shown longer periods of growth and shorter periods of decline over the years.
Recession vs. Depression
The last depression was in the 1930’s. A depression is a more severe recession that can last for several years. A couple of features that can mark a depression are a GDP decline of more than 10% and an unemployment rate near 25%. The last recession was right after the 2008 financial crisis. After the last recession, we saw 121 months of growth or economic expansion.
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