Explained: Defining recessions
The recent recession, the longest since The Great Depression, lasted from December 2007 until June 2009, according to a Sept. 20 announcement from the National Bureau of Economic Research (NBER), the pre-eminent group calibrating the duration and depth of U.S. downturns. The way the NBER renders such verdicts, however, is often overlooked.Recessions are commonly said to occur when an economy contracts for at least two consecutive quarters, in terms of real Gross Domestic Product. While that may be a good rule of thumb, the genuine NBER definition of a recession does not hinge solely on GDP, but instead identifies “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales,” as a bureau fact sheet stated. Moreover, the bureau calculates economic activity based on monthly statistics, not just quarterly figures. This approach...