What Is a Recession?
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... A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession. However, more complex formulas are also used to determine recessions.
Economists at the National Bureau of Economic Research (NBER) measure recessions by looking at nonfarm payrolls, industrial production, and retail sales, among other indicators.1 NBER also points out that there is "no fixed rule about what measures contribute information to the process or how they are weighted in our decisions."
A downturn must be deep, pervasive, and lasting to qualify as a recession by NBER's definition. Since some of these qualities may not be evident when a downturn first begins, many recessions are called retroactively.2 ...
