What is a Recession?

Learn about what a recession is, its causes, effects, examples, and statistics to better understand its impact on the economy.


A recession is a significant decline in economic activity that lasts for an extended period of time. It is commonly defined as two consecutive quarters of negative GDP growth.

Causes of a Recession

  • Financial Crises
  • Political Instability
  • External Shocks
  • Overvalued Markets

Effects of a Recession

  • High Unemployment Rates
  • Decrease in Consumer Spending
  • Reduction in Business Investments
  • Decline in GDP

Examples of Recessions

One of the most well-known recessions is the Great Recession of 2008. It was caused by the burst of the housing bubble and led to a global financial crisis.

Case Study: The 2020 COVID-19 Recession

The COVID-19 pandemic caused a sharp economic downturn in 2020, leading to widespread job losses and business closures. Governments around the world implemented stimulus packages to help economies recover.


According to the National Bureau of Economic Research, there have been 47 recessions in the United States since 1857. The average length of a recession is about 11 months.

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