A recession is a significant decline in economic activity lasting more than a few months. Output falls. Jobs disappear. Income drops. The official definition in many countries is two consecutive quarters of negative GDP growth, though economists look at a broader set of indicators.

Recessions hurt unevenly. Workers in construction, manufacturing, and hospitality lose jobs first. Lower-income households feel the squeeze quickly. Investors see portfolios shrink. Governments lose tax revenue just when demand for social services rises.

Most recessions end on their own, but policy can shorten them. Central banks cut interest rates. Governments spend on infrastructure or send checks to households. The 2008 crisis and the 2020 pandemic downturn both saw aggressive intervention. The debate is not whether to respond, but how much and how fast.

Common features

• Falling GDP
• Rising unemployment
• Declining consumer spending
• Business investment cuts
• Falling asset prices