What is a recession?
Short answer
A recession is a significant decline in economic activity spread across the economy and lasting more than a few months. Two straight quarters of falling GDP is a common rule of thumb, not an official US definition.
Two ways to define it
The "technical recession" rule of thumb counts two consecutive quarters of falling real gross domestic product (GDP). Many media outlets and some countries use it because it is simple to apply.
In the United States there is no such official rule. The National Bureau of Economic Research (NBER), a private research organisation, has a Business Cycle Dating Committee that decides when US recessions begin and end. It describes a recession as a significant decline in economic activity spread across the economy and lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.
Why the definitions differ
The NBER looks at several monthly indicators rather than GDP alone, and it announces turning points months after they occur, once the data are clear. A rule based on two quarters of GDP can be met without a broad downturn, and a broad downturn can occur without meeting it.
Recession, depression and expansion
A recession is the period of contraction between a peak and a trough in the business cycle; the period of growth afterwards is an expansion. "Depression" has no formal definition and is informally used for a deep and prolonged downturn, with the 1930s Great Depression as the usual reference.