Your views: What's a recession?

No one can really make their mind up as to whether the UK economy is approaching recession or not.
A recession, as economists keep reminding us, is when output falls for two successive quarters.

But economic statistics are one thing. Most people's definition of a real slump is when the bad times start to lap up to their own front door.

In any case, few people are satisfied with the way we and almost every other country measure our success - rises in gross domestic product, or economic output.

Economists would love to come up with some measure of contentment or security, an index that mixes our monetary wealth with factors calculating happiness, creativity or fulfilment.

Differences

There is an old joke among economists that states:
A recession is when your neighbor loses his job.
A depression is when you lose your job.
The difference between the two terms is not very well understood for one simple reason: There is not a universally agreed upon definition. If you ask 100 different economists to define the terms recession and depression, you would get at least 100 different answers. I will try to summarize both terms and explain the differences between them in a way that almost all economists could agree with.

Recession in USA

This is a list of recessions that have affected the United States. Though economists define a recession as two quarters of negative GDP growth, the beginning and ending dates of U.S. recessions are officially determined by the National Bureau of Economic Research (NBER). The NBER defines a recession as, "...a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." From 1945-2007 the NBER has identified 11 recessions; their average duration was 10 months (peak to trough). 

^{Most of the recessions listed here have affected economies on a worldwide scale; some of them are the Great Depression, the late 1980s recession, and the early 2000s recession. Recessions in one country are often grouped together with recessions in other countries that are related, and they commonly share a focal point as the cause of the recession.}

Main cause

In economics, a recession is a general slowdown in economic activity in a country over a sustained period of time, or a business cycle contraction During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes and business profits all fall during recessions.

Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.

Identifying

In a 1975 New York Times article, economic statistician Julius Shiskin suggested several economic indicators that identify a recession; these included two successive quarterly declines in GDP. Over time, the other rules have been largely forgotten, and a recession is now often identified as the reduction of a country's GDP (or negative real economic growth) for at least two quarters Some economists prefer a more robust definition of a 1.5% rise in unemployment within 12 months.

Attributes

A recession has many attributes that can occur simultaneously and can include declines in coincident measures of activity such as employment, investment, and corporate profits.

A severe (GDP down by 10%) or prolonged (three or four years) recession is referred to as an economic depression, although some argue that their causes and cures can be different

Predictors of a recession

Although there are no completely reliable predictors, the following are regarded to be possible predictors.

• In the U.S. a significant stock market drop has often preceded the beginning of a recession. However about half of the declines of 10% or more since 1946 have not been followed by recessions. In about 50% of the cases a significant stock market decline came only after the recessions had already begun.
• Inverted yield curve, the model developed by economist Jonathan H. Wright, uses yields on 10-year and three-month Treasury securities as well as the Fed's overnight funds rate. Another model developed by Federal Reserve Bank of New York economists uses only the 10-year/three-month spread. It is, however, not a definite indicator; it is sometimes followed by a recession 6 to 18 months later.
• The three-month change in the unemployment rate and initial jobless claims.
• Index of Leading (Economic) Indicators (includes some of the above indicators).