During our recent High School Fed Challenge competition, students were frequently asked to state the definition of a recession. Their answer: “A recession is defined as two consecutive quarters of negative GDP growth.”
Is this correct? No! I know several economic textbooks use this definition, but the National Bureau of Economic Research (NBER) officially decides whether or not we are in a recession. The bureau’s Web site at NBER.com defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Frequently these type of economic conditions coincide with two or more consecutive quarters of negative GDP growth, but not always. For example, the 2001 recession did not!
So…Are we in a recession?
By: Wade Rousse