What is a recession?

A recession is a significant decline in economic activity that is spread across the economy and lasts more than a few months. That's the definition used by the National Bureau of Economic Research, whose Business Cycle Dating Committee keeps the chronology of U.S. business cycles and dates the start and end of each one.

The two-quarters rule you hear in the news isn't the test. The NBER says most of the recessions it has identified did include two or more straight quarters of falling real GDP, but not all of them; the 2001 recession didn't.

Photo of Ross Kilburn

Updated

Where you’ll see the word

  • A shaded band on a chart

    On FRED, the Federal Reserve Bank of St. Louis's data site, the period between a peak and a trough is always shaded as a recession.

  • An NBER announcement

    The committee announces the peak or trough after it has dated the turn.

The NBER's words

  • Contraction The NBER's word for the stretch from a peak to a trough in its chronology of U.S. business cycle expansions and contractions. NBER
  • Peak, trough The NBER's words for the two months the committee dates: the peak is the high point just before a recession, the trough the low point where it ends. NBER
  • Depression Not a category the NBER uses: it does not separately identify depressions in its chronology. The 1930s episode is the most recent one generally regarded as a depression. NBER

What a recession means for you

The date describes the whole economy, not your job. The committee works from a range of monthly measures of aggregate real economic activity: real personal income less transfers, nonfarm payroll employment, real personal consumption expenditures, manufacturing and trade sales adjusted for price changes, employment as measured by the household survey, and industrial production. Nothing in that list says whether your own income fell.

The word arrives late. The NBER has no fixed timing rule; the committee waits long enough to avoid any doubt about the existence of a peak or trough. Its announcements have come between four and 21 months after the turning point: the shortest was the February 2020 peak, announced in June 2020, and the longest the March 1991 trough, announced in December 1992.

The end isn't the recovery. The trough is the month activity stops falling, not the month things feel better. After the June 2009 trough, the NBER notes, the unemployment rate kept rising for four months, to a peak in October 2009, and real personal income less transfers didn't get back above its previous peak until July 2011.

Questions about recessions

When did the 2008 recession start and end?

The NBER dates the peak to December 2007 and the trough to June 2009. By its counting rule, in which the month after the peak is the first month of the recession and the trough month is the last, that's 18 months.

How long did the 2020 recession last?

Two months. The peak was February 2020 and the trough April 2020. The committee said the drop in activity was so great and so widely diffused through the economy that it should be classified as a recession even if it proved to be quite brief.

Our pages that use it

Related terms

  • Gross Domestic Product (GDP)Gross domestic product (GDP) measures the value of final goods and services produced in the United States during a period.
  • Unemployment RateThe share of the labor force without a job who are actively looking for work or on temporary layoff.
  • Yield CurveA graph showing interest rates on debt with different maturities.
  • Financial DistressDifficulty meeting financial obligations with available income and resources.

Sources and method

This page uses none of our own data. The definition, the measures, the counting rule and the announcement dates come from the NBER's Business Cycle Dating Procedure FAQ and its chronology page, opened on Oct 22, 2026.

  • National Bureau of Economic Research · Business Cycle Dating Procedure: Frequently Asked Questions, at nber.org
  • National Bureau of Economic Research · US Business Cycle Expansions and Contractions, at nber.org
  • Federal Reserve Bank of St. Louis, FRED · NBER based Recession Indicators (USREC), at fred.stlouisfed.org

We write with assistance from AI tools. Figures come from the data and sources named on this page.