What is a recession?

Simply explained, a recession occurs when the economy stops expanding and begins to contract.

Some claim that occurs when a country's gross domestic product, or the value of the products and services produced there, drops for two straight quarters, or half a year.

However, the National Bureau of Economic Research, a century-old nonprofit largely regarded as the arbitrator of recessions and booms, adopts a broader perspective in the United States.

A recession, as defined by the bureau, is "a severe fall in economic activity" that is pervasive and lasts for a number of months. That typically entails diminishing incomes, employment, industrial output, and retail sales in addition to a declining GDP.

While the Business Cycle Dating Committee of the bureau declares when a recession is underway, this takes place well after the slump has already started. There are several types and sizes of recessions. Some are lengthy while others are brief. While some have an adverse effect that lasts, others are quickly forgotten.

When economic growth resumes, a recession is over.