How is a recession characterized?

A recession is characterized by a significant decline in economic activity that lasts for an extended period. This includes reductions in GDP, widespread decreases in consumer spending, increased unemployment rates, and negative shifts in investment. During a recession, economic indicators point to a slowing economy, which can affect nearly all sectors and lead to decreased consumer and business confidence.

The duration and breadth of the economic decline are key to identifying a recession. Typically, it must persist for two consecutive quarters of negative GDP growth, though specific definitions may vary. This understanding is critical for policymakers and economists as they develop strategies to mitigate the effects and stimulate economic recovery. The focus on prolonged negative economic activity distinctly sets it apart from other economic fluctuations that might not represent a full economic downturn.