The technical definition of a recession is two consecutive quarters of negative GDP growth.
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
Related Community Blogs
Recent Mentions on Fool.com
- Ford Motor Company Left Its Detroit Competition in the Dust Last Month
- The Dollar: War Games and Ben Bernanke Boasts
- Here's Why It's So Easy to Manipulate Ordinary Investors
- 3 Large-Cap Biotech Stocks Whose Valuations Should Make You Skeptical
- Mark Your Calendar: General Motors Company Earnings
- Japan Keeps Rallying As Investors Expect More Stimulus