What exactly is a recession and how do we know when we are in one?

Answer 1

Generally, a recession means a slowdown in economic activity and usually means very few jobs, tight credit, and sluggish or depressed sales overall.

Thechnically, arecession is defined as a decrease in the nations total economicactivity (the GNP) for two or more consecutive quarters.

Answer 2

You'll never get an "exact" answer to that quetion, as it's really just a theory anyway.

Recession? Depression? What's the difference?
From Mike Moffatt,
Your Guide to Economics.
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What's a recession? How do we know if we're in one?
There’s an old joke among economists that states:
A recession is when your neighbor loses his job.

A depression is when you lose your job.

The difference between the two terms is not very well understood for one simple reason: There isn’t a universally agreed upon definition. If you ask 100 different economists to define the terms recession and depression, you’d get at least 100 different answers. I’ll try to summarize both terms and explain the differences between them in a way that almost all economists could agree with.


Recession: The Newspaper Definition
The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.
This definition is unpopular with most economists for two main reasons. First, this definition does not take into consideration changes in other variables. For example this definition ignores any changes in the unemployment rate or consumer confidence. Second, by using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.


Recession: The BCDC Definition
The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period. By this definition, the average recession lasts about a year.

Answer 3

We know if we are in a recession, by looking at the stock market, if it crashes, than we hit a low point, and not a peak, and that means the economy is in a recession.

Answer 4

http://en.wikipedia.org/wiki/Recession

Excellent clear discussion of the term and of macroeconomics at link above.

First consideration, like all adjectives and all nouns that depend on adjectives for their meaning..."recession" is a relative, debatable, opinion based term.

We can disagree on whether we are in a recession or not, but the Wikipedia link gives you the most common elements on which we base our decision...

...and to all these I would surely ad the following : government/commercial marketing/public relations propaganda/politics; i.e. Who is the source of the opinion and for what motive?

For my purposes... we are always in a recession when I am unemployed, E.G. now.

Answer 5

recession is defined as 3 straight quarters of a loss in the GDP.

Answer 6

A recession is when your neighbor is out of work. A depression is when you're out of work.

Answer 7

Liberals will just say that it is when a Republican president is in office.