Recession

The technical definition of a recession is two consecutive quarters of negative GDP growth.

Expanded Definition

The National Bureau of Economic Research (NBER) is considered the authority on determining when the U.S. economy is in recession. This is a backward-looking declaration, as when NBER announced in late 2008 that the economy had been in recession for a year. The March 2001 peak was announced in November 2001, for another example.

NBER takes into account real GDP, real income, employment, industrial production, and wholesale/retail sales. It defines a recession as beginning just after the economy reaches a peak of activity and ending as the economy reaches its trough.

Of course, investors, consumers, and employees feel the effects of the recession before NBER lets us know when it began. NBER is a private, nonprofit, nonpartisan research organization.

NBER's Business Cycle Dating Committee keeps track of the peaks and troughs (by month) of U.S. recessions. Data dates back to the mid-19th century.

Many Fools like to take advantage in a recession by buying high-quality stocks whose prices get beaten down as pessimism spreads without regard for the businesses' intrinsic values.

Related Fool Articles

• 4 Key Recession Indicators
• Are We in a Recession? Who Cares
• The Motley Fool's Recession Survival Guide

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Related Terms

• Depression
• Gross domestic product

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