The economy

Recession

A period when a country's economy shrinks, with falling production, sales and jobs. A common rule of thumb is two quarters in a row of falling GDP.

Why does it matter?

In a recession, many companies sell and earn less, and some struggle to pay their debts.

How do I read it?

In the U.S., recessions are officially dated by a group of economists (the NBER), often months after they begin. Share prices often fall before or during a recession and sometimes start rising again before it ends.

Example

In 2020, the U.S. economy shrank sharply when the pandemic closed businesses. According to the NBER, it was one of the shortest recessions on record: about two months.