Key Insights: the Definition of 'Recession'
An overview of the process by which U.S. recessions are declared and dated
Although it is commonly thought that a recession is defined as two consecutive quarters of negative GDP growth, the truth is more complicated. Recessions are officially declared by a committee of economics professors. The committee's decisions are typically based on four monthly economic indicators, and it is often hesitant to declare a recession until the evidence is overwhelming, which can be difficult, given the volatility of the indicators. Political considerations also affect the timing of the committee's decision to officially declare a recession, as the non-partisan group seeks to remain independent from the election cycle and other the political sphere.
This summary provides a contextual background for understanding the criteria for declaring and dating recessions, as well as the economic indicators that influenced the committee's decision to declare the current recession.
Washington DC 20007