Recession
A significant, broad, sustained decline in economic activity.
What is Recession?
Popularly two consecutive quarters of negative GDP growth; officially dated in the US by the NBER using depth, diffusion, and duration across employment, income, and production. Equity markets typically bottom before a recession officially ends.
Recession: a worked example
The NBER dated the COVID recession at just two months, February to April 2020.
More terms in Macro & Markets
Inflation
A general rise in prices that erodes purchasing power.
Real vs. Nominal Return
Return after inflation versus the headline number.
Federal Funds Rate
The overnight interbank lending rate targeted by the Fed.
Monetary vs. Fiscal Policy
Central bank rate and money supply tools versus government tax and spending.
Yield Curve
A plot of Treasury yields across maturities.
Yield Curve Inversion
Short-term yields exceeding long-term yields - a recession signal.
Quantitative Easing
Central bank purchases of long-dated assets to push down long rates.
Gross Domestic Product (GDP)
The total value of goods and services produced in an economy.