Recession

Recession, extended period of economic decline. In the United States, a recession is defined as a drop in the gross national product (GNP) over 2 consecutive quarterly periods. During recessions, business activities such as buying, selling, and overall productivity decline, causing increases in unemployment and unpredictable fluctuations in stock markets. Until the 1970s, recessions caused prices to fall, but since then they have continued to increase despite several recessions. A sudden shortage of vital goods, such as oil and petroleum-based products, often triggers recessions and accompanying rising prices, which result in decreased consumer spending. A pattern is formed in which manufacturers decrease production to keep pace with reduced demands for their goods, and fewer workers are needed to produce those goods. Recessions are often worldwide; an extended period of recession could develop into a depression. Short-term recessions are called economic slumps.

See also: Business cycle; Depression.