Definition
A recession is commonly defined as two consecutive quarters of negative GDP growth, though the NBER (official arbiter) uses a broader definition including employment, income, and production indicators. Recessions average 11 months but vary widely. Stock markets typically decline 30-40% during recessions but often bottom before the recession ends and recover quickly once growth resumes.
lightbulb Example
The 2020 COVID recession was the shortest on record (2 months) but the deepest in modern history, with GDP falling 31% annualized in Q2 2020. The S&P 500 fell 34% in 23 days but fully recovered within 5 months.
verified_user Key Points
- Commonly: two consecutive quarters of negative GDP
- NBER uses broader definition
- Average duration ~11 months
- Stock markets often bottom before recession ends