Editing Recession (section)

{{Short description|Business cycle contraction}}
{{About|a slowdown in economic activity}}
{{Use dmy dates|date=July 2022}}
{{Macroeconomics sidebar}}
{{Economic history sidebar}}
In [[economics]], a '''recession''' is a [[business cycle]] contraction that occurs when there is a period of broad decline in economic activity.<ref>{{Cite Merriam-Webster|recession}}</ref><ref>{{cite encyclopedia |url=http://encarta.msn.com/encnet/features/dictionary/DictionaryResults.aspx?refid=1861699686 |chapter=Recession definition |access-date=19 November 2008 |title=Encarta World English Dictionary [North American Edition] |publisher=Microsoft Corporation |year=2007 |url-status=dead |archive-url=https://web.archive.org/web/20090328205929/https://encarta.msn.com/encnet/features/dictionary/DictionaryResults.aspx?refid=1861699686 |archive-date=28 March 2009 }}</ref> Recessions generally occur when there is a widespread drop in spending (an adverse [[demand shock]]). This may be triggered by various events, such as a [[financial crisis]], an external trade shock, an adverse [[supply shock]], the bursting of an [[economic bubble]], or a large-scale [[Anthropogenic hazard|anthropogenic]] or [[natural disaster]] (e.g. a [[pandemic]]). There is no official definition of a recession, according to the [[International Monetary Fund|IMF]].<ref name="auto">{{Cite web|url=https://www.imf.org/external/pubs/ft/fandd/basics/recess.htm|title=Recession: When Bad Times Prevail - Back to Basics| last1=Claessens | first1=Stijn | last2=Kose | first2=M. Ayhan | date=2011|website=International Monetary Fund}}</ref>

In the [[United States]], a recession is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real [[GDP]], real income, employment, industrial production, and wholesale-retail sales."<ref>{{cite web |date=2008-01-07 |title=Business Cycle Dating Committee Announcement January 7, 2008 |url=https://www.nber.org/cycles/jan08bcdc_memo.html |website=www.nber.org}}</ref> The [[European Union]] has adopted a similar definition.<ref name=":0">{{Cite web |title=FAQ {{!}} EABCN |url=https://eabcn.org/dc/faq |url-status=live |archive-url=https://web.archive.org/web/20220429152420/https://eabcn.org/dc/faq |archive-date=29 April 2022 |access-date=29 December 2021 |website=eabcn.org}}</ref><ref name=":1">{{Cite web |title=The CEPR and NBER Approaches |url=https://eabcn.org/files/cepr-and-nber-approaches |access-date=30 July 2022 |website=eabcn.org |archive-date=3 March 2021 |archive-url=https://web.archive.org/web/20210303032731/https://eabcn.org/files/cepr-and-nber-approaches |url-status=dead }}</ref> In the [[United Kingdom]] and [[Canada]], a recession is defined as negative [[economic growth]] for two consecutive quarters.{{refn|<ref name="BBC">{{cite news|url=http://news.bbc.co.uk/1/hi/business/7495340.stm|title=Q&A: What is a recession?|date=8 July 2008|work=BBC News}}</ref><ref name="UKTreasury">{{cite web|url=http://www.hm-treasury.gov.uk/junebudget_glossary.htm|title=Glossary of Treasury terms|publisher=[[HM Treasury]]|archive-url=https://web.archive.org/web/20121102095705/http://www.hm-treasury.gov.uk/junebudget_glossary.htm|archive-date=2 November 2012|url-status=dead|access-date=25 October 2012}}</ref><ref>{{Cite web |last1=Bonham |first1=Mark S. |last2=Poulin |first2=Jessica |date=6 July 2023 |title=Recession in Canada |url=https://www.thecanadianencyclopedia.ca/en/article/recession |url-status=live |archive-url=https://web.archive.org/web/20240823043125/https://www.thecanadianencyclopedia.ca/en/article/recession |archive-date=23 August 2024 |access-date=23 August 2024 |website=[[The Canadian Encyclopedia]]}}</ref><ref>{{Cite web |last=Deveau |first=Denise |date=3 August 2022 |title=An economist explains: What to know about a recession |url=https://www.cpacanada.ca/news/canada/recession-explainer |url-status=live |archive-url=https://web.archive.org/web/20240814022658/https://www.cpacanada.ca/news/canada/recession-explainer |archive-date=14 August 2024 |access-date=23 August 2024 |website=[[CPA Canada]]}}</ref>}}

Governments usually respond to recessions by adopting expansionary [[macroeconomic policies]], such as [[monetary policy|increasing money supply and decreasing interest rates]] or [[fiscal policy|increasing government spending and decreasing taxation]].