What is a 'recession'?

In the light of recent global events, how do you all view 'recessions'?

What do you think they are? Both in terms of practical and academic contexts?

I think it would be really interesting to see how people here define the term, in a general, local and global setting.

heyjude

A recession is defined as a decline in GDP for two or more consecutive quarters.

Politically I suspect that the definition of whether you are in a recession or not depends on your perspective, if you are in power then you'd probably err on the side of flexibility/denial when the downturn starts and then probably avoid use of the R word, preferring instead to use terms like downturn or slowdown

dresden8

There's an alternative definition

It's a downturn when other people are made unemployed, it's a recession when you're made unemployed.

leninbenjamin

dresden8 wrote: »

There's an alternative definition

It's a downturn when other people are made unemployed, it's a recession when you're made unemployed.

nope. unemployment is one of the consequences of a recession, not a determinant.

other looser definitions of a recession simply call it the contraction period of the business cycle. i do don't like that one, it's very vague and doesn't really reflect on how governments can act as the stabilizer for the business cycle. but either way it means a decline in level of economic activity in the economy.

a mental distinction i make personally is to associate a recession with severe overheating of the economy in boomtime, largely due to la government policy like what happened here with the construction sector. nothing scientific about that though.

as for the causes of a recession, they can largely come from anywhere. but the usual pattern is some kind of isolated crises that tends to shake consumer confidence eveywhere sparking a domino effect.

Flamed Diving

I would say net real 'negative growth' in a year, though I'm sure that wont be a popular choice.

SoCal90046

heyjude wrote: »

A recession is defined as a decline in GDP for two or more consecutive quarters.

Politically I suspect that the definition of whether you are in a recession or not depends on your perspective, if you are in power then you'd probably err on the side of flexibility/denial when the downturn starts and then probably avoid use of the R word, preferring instead to use terms like downturn or slowdown

The definition of a recession as two consecutive quarters of declining real GDP is often found in newspapers and other media outlets, but it isn't considered to be totally accurate by most economists. For example, if an economy were to suffer two consecutive quarters where the real GDP slipped by 0.2 percent in each quarter, then by the definition above, it would be deemed to be in recession. Alternatively, if the economy stalled for one quarter, with the GDP slipping by 0.4 percent or more, then by the definition above, the economy wouldn't be in recession.

In the US, the National Bureau of Economic Research 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." It's a good definition. As such, the Bureau has been able to call a recession even when the real GDP slipped in only one quarter.

Here's a link to a recent press release from the ESRI. Some media outlets seemed to use this release to support the idea that Ireland had entered a recession. You'll note that the ESRI examines many different activities in the economy, not just overall output.

The two consecutive quarter idea is a good starting point, but it doesn't yield a complete picture of how an economy is performing.

Húrin

recessions are fun

FROM A PERSONAL STANDPOINT, IT HAS MADE, AND LIKELY WILL MAKE, ABSOLUTELY NO DIFFERENCE TO ME.

LITERALLY; THE ONLY DIFFERENCE IN MY DAY TO DAY LIFE IS THAT EVERYTIME I TURN ON THE RADIO I HEAR THE WORD RECESSION



(Just realised i wrote all that in capital letters, but im too lazy to re-write it all, so... yeah.. sorry)

Oshare Bones

Deleted User wrote: »

FROM A PERSONAL STANDPOINT, IT HAS MADE, AND LIKELY WILL MAKE, ABSOLUTELY NO DIFFERENCE TO ME.

LITERALLY; THE ONLY DIFFERENCE IN MY DAY TO DAY LIFE IS THAT EVERYTIME I TURN ON THE RADIO I HEAR THE WORD RECESSION



(Just realised i wrote all that in capital letters, but im too lazy to re-write it all, so... yeah.. sorry)

So you don't pay taxes, drive a car, or purchase anything which VAT is paid on?

dunno - never heard of it?

Socal - i was interested in people's personal definitions / understanding of the term recession.

SoCal90046

Deleted User wrote: »

Socal - i was interested in people's personal definitions / understanding of the term recession.

For me it's a good time to buy stocks; I haven't ever been personally affected by a recession, I've actually benefited from a general slowdown in the economy.