what is a recession

A recession is a significant, widespread, and prolonged downturn in economic activity. It occurs when there is a general decline in economic activity, which is usually triggered by various events such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster. Economists measure a recessions length from the prior expansions peak to the downturns trough. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months” . In the United States, a recession is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". The European Union has adopted a similar definition, while in the United Kingdom, a recession is defined as negative economic growth for two consecutive quarters. During a recession, the economy struggles, people lose work, companies make fewer sales, and the country’s overall economic output declines. Governments usually respond to recessions by adopting expansionary macroeconomic policies.