# Recession A **recession** is a broad, sustained contraction of the economy. The United States has no government definition. The call is made by a private body, the [[NBER Recession Dating]] committee, which defines a recession as "a significant decline in economic activity that is spread across the economy and that lasts more than a few months." There is no formula. The committee weighs payrolls, real income, consumer spending, industrial production and [[GDP]] together, and it announces its dates months or years after the fact. That gap between how the economy feels and the official call is why "recession" is the most fought-over word in economic politics. The label is politically lethal, it is assigned retroactively, and a looser folk definition sits right beside the official one for whoever benefits from using it. ## The two definitions - **The official one (NBER):** depth, breadth and duration across many indicators. Most recessions include two or more quarters of falling real GDP, "but not all of them"; the 2001 recession did not. - **The folk one ("two negative quarters of GDP"):** a rule of thumb, not a standard. It traces to **Julius Shiskin**, then Commissioner of Labor Statistics, in a *New York Times* piece on **Dec 1, 1974**. He offered "declines in real G.N.P. for 2 consecutive quarters" as one of several rough criteria. ## US recessions since 1980 (NBER dates) | Peak | Trough | Notes | |---|---|---| | Jan 1980 | Jul 1980 | [[Great Inflation]]; [[Jimmy Carter]] | | Jul 1981 | Nov 1982 | [[Volcker Shock]]; unemployment peaked at 10.8% | | Jul 1990 | Mar 1991 | Trough not announced until Dec 1992, a 21-month lag | | Mar 2001 | Nov 2001 | No two consecutive negative quarters of GDP | | Dec 2007 | Jun 2009 | [[2008 Financial Crisis]]; start announced Dec 1, 2008, a year late | | Feb 2020 | Apr 2020 | [[COVID-19 Pandemic]]; announced June 8, 2020, a record 4-month lag | NBER's most recent announcement, on **July 19, 2021**, set the April 2020 trough. As of October 2026 no recession has been dated since. ## Definition fights - **2022: "they're changing the definition."** Q1 2022 real GDP printed −1.6% and the Q2 advance estimate −0.9% (July 28, 2022), while payrolls were growing fast. On July 21, 2022, the White House Council of Economic Advisers published an explainer saying the two-quarter rule "is neither the official definition nor the way economists evaluate the state of the business cycle." Opponents framed it as the [[Joe Biden]] administration redefining recession to dodge the word. Fact-checkers found the definition had not changed. Revisions later made **Q2 2022 positive**, so the "recession" that drove a summer of messaging never existed in the current data. Full anatomy at [[NBER Recession Dating]]. - **2024: the [[Sahm Rule]] triggers.** The July 2024 reading hit 0.53, crossing the 0.50 line weeks before a presidential election. Its creator, [[Claudia Sahm]], argued publicly that the trigger was distorted, and no recession was dated. - **2025–26: revisions again.** BEA's September 2026 annual update raised 2025 growth to 2.3% (from 2.1–2.2%) and reshaped the quarterly path. Any recession claim that rests on a single early GDP print is a claim about one vintage of the data. See [[GDP]]. ## Where things stand (October 2026) **No recession by any official or rule-based measure.** Real GDP grew 2.2% in Q2 2026, the Sahm Rule reads 0.00, the yield curve is *not* inverted, and jobless claims are near multi-decade lows. The live risk is elsewhere: hiring has nearly stopped, consumer sentiment is below 50, and inflation is being driven by an energy shock. That combination is why the 2026 argument is about [[Stagflation]] rather than recession. Current numbers: [[State of the US Economy]]. ## Warning signals - [[Sahm Rule]] — the unemployment-based real-time trigger - [[Yield Curve Inversion]] — the bond market's signal, whose perfect record broke in 2022–24 - [[Initial Jobless Claims]] and [[JOLTS]] — the weekly layoff pulse and the hiring freeze - [[Consumer Sentiment Index]] and [[Consumer Confidence Index]] — how it feels - [[NBER Recession Dating]] — the official referee ## See also - [[Stagflation]] · [[Great Depression]] · [[Panic of 1893]] · [[Panic of 1907]] · [[2008 Financial Crisis]] - [[Indicator Cherry-Picking]] — definition fights as a technique - [[Keynesian Economics]] · [[Monetarism]] — the two traditions' answers to what governments should do in one