Definition:

The last phase in the economic cycle. A period of temporary economic decline, typically defined by a fall in GDP in two consecutive quarters.

Example:

The Housing Market and Mortgage Crisis of the late 2000s caused a recession, lasting from December 2007 to June 2009.

Calculation(s):

% Change in GDP = Q2 GDP / Q1 GDP – 1

More Information:

While a recession is typically defined by a fall in GDP for two consecutive quarters, it is officially declared by the National Bureau of Economic Research. Recessions are a part of the economic cycle, and fortunately, the shortest part of the cycle, followed by recovery and a return to economic expansion.

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