What is a recession typically defined as?

A recession is typically defined as two consecutive quarters of negative economic growth, which aligns with the accepted economic standard for identifying significant declines in economic activity. This definition emphasizes the importance of sustained downturns rather than short-term fluctuations, indicating that a recession reflects more than just temporary economic setbacks.

This criteria helps economists and policymakers identify recessions based on real economic metrics, specifically looking at Gross Domestic Product (GDP), which encompasses the total value of all goods and services produced in an economy. By focusing on a minimum of two quarters, the definition avoids misclassifying brief declines as recessions, which can occur due to seasonal effects or other short-lived factors.

In contrast, the other options do not accurately represent the definition of a recession. Increased consumer spending and business investment indicate a growing economy, not a recession. A single quarter of economic decline may represent a contraction but does not meet the established threshold for a recession, as it requires consistently negative growth over at least six months. Lastly, a sustained increase in national production describes economic expansion rather than recession, as it reflects positive growth trends.