What Does It Mean to Be in a Recession

Learn what it means to be in a recession and how it impacts the economy. Discover the causes, examples, and strategies to combat a recession in this informative article.

Understanding Recessions

A recession is 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.

Causes of a Recession

There are various factors that can contribute to a recession:

  • High-interest rates
  • Decline in consumer confidence
  • Decrease in investment spending

Impact of a Recession

During a recession, businesses may struggle, leading to:

  • Job losses
  • Reduced consumer spending
  • Decrease in investments

Example of a Recession: The Great Recession

The Great Recession of 2008 was one of the most severe economic downturns in U.S. history, triggered by the subprime mortgage crisis. This led to a global recession impacting various sectors worldwide.

How to Identify a Recession

Economists typically use two consecutive quarters of negative GDP growth to define a recession. Other indicators such as rising unemployment rates and declining industrial production can also signal a recession.

Strategies to Combat a Recession

Governments and central banks implement various measures during a recession to stimulate the economy:

  • Cutting interest rates
  • Increasing government spending
  • Implementing tax cuts


Being in a recession means facing economic hardships, including job losses and reduced spending. Understanding the causes and impacts of a recession can help individuals and policymakers navigate through challenging economic times.

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