Recession Definition - Glossary

Recession is a period of economic decline marked by reduced GDP, high unemployment, and decreased consumer spending.

Recession is a significant decline in economic activity across the economy, lasting more than a few months. It's visible in real GDP, income, employment, industrial production, and wholesale-retail sales. During a recession, businesses face reduced demand, often leading to layoffs and increased unemployment. Consumers become cautious, cutting back on spending. This decrease in demand can further slow economic growth. Central banks may react by lowering interest rates to encourage borrowing and investment. Governments might increase spending to stimulate the economy. A recession’s duration and impact can vary, but recovery typically follows as economic conditions stabilize and improve.