Recession

A recession is a significant decline in economic activity that lasts for an extended period of time, typically defined as two consecutive quarters (six months) of negative GDP growth.

During a recession, economic activity declines, leading to lower production, higher unemployment, and reduced consumer and business spending. It can be caused by a variety of factors, such as a decrease in consumer confidence, high inflation, financial crises, or disruptions in trade.

Recessions can affect individuals, businesses, and governments, leading to challenges in employment, income, and overall economic well-being.

We can often tell if we are in a recession by observing changes in everyday life. For example, construction activity in the area, both residential and commercial, may slow down. We might hear about people losing their jobs or taking pay cuts. Additionally, as consumer spending drops, stores may be forced to reduce prices and offer large discounts to clear out excess inventory. These are practical signs that indicate the economy is in a recession.

From a statistical perspective, key indicators like unemployment rates will also rise, typically surpassing 6%. In the U.S., a noticeable increase in jobless claims would also occur, potentially rising well above 300,000, and possibly reaching 400,000 or more.