Although an economy can show signs of weakening months before a recession begins, the process of determining whether a country is in a true recession often takes time. In addition, different measures of activity may exhibit conflicting behavior, making it difficult to identify whether the country is indeed suffering from a broad-based decline in economic activity.
There were 122 completed recessions in 21 advanced economies over the 1960–2007 period.Although this sounds like a lot, recessions do not happen frequently. The latest episode was one of the longest and deepest recessions since the Great Depression of the 1930s. recessions had become milder over time, the recent global crisis reversed that trend.● The fall in consumption is often small, but both industrial production and investment register much larger declines than that in GDP. ” forthcoming, NBER 2010 International Seminar on Macroeconomics, Richard Clarida and Francesco Giavazzi (eds.).
● They typically overlap with drops in international trade as exports and, especially, imports fall sharply during periods of slowdown. recession prior to 2007 lasted about 11 months and resulted in a peak-to-trough output decline of 1.7 percent. Although this definition is a useful rule of thumb, it has drawbacks.A focus on GDP alone is narrow, and it is often better to consider a wider set of measures of economic activity to determine whether a country is indeed suffering a recession.It led to a sharp increase in unemployment—along with substantial declines in output, consumption and investment.There is no official definition of recession, but there is general recognition that the term refers to a period of decline in economic activity.Indeed, the proportion of time spent in recession—measured by the percentage of quarters a country was in recession over the full sample period—was typically about 10 percent.