A recession is a significant, widespread, and prolonged downturn in economic activity. There is no official definition of a recession, but there is general recognition that the term refers to a period of decline in economic activity. Most commentators and analysts use two consecutive quarters of decline in a countrys real (inflation-adjusted) gross domestic product (GDP) as a practical definition of a recession. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators". The committee focuses on a comprehensive set of measures, including not only GDP but also employment, income, sales, and industrial production, to analyze the trends in economic activity.

A recession can be triggered by various factors, such as a countrys decision to reduce inflation by employing contractionary monetary or fiscal policies, which can lead to a decline in demand for goods and services, eventually resulting in a recession. Other recessions, such as the one that began in 2007, are rooted in financial market problems. Sharp increases in asset prices and a speedy expansion of credit often coincide with rapid accumulation of debt. As corporations and households get overextended and face difficulties in meeting their debt obligations, they reduce investment and consumption, which in turn leads to a decrease in economic activity.

In summary, a recession is a significant, widespread, and prolonged downturn in economic activity, and it is generally recognized as a period of decline in economic activity. Most commentators and analysts use two consecutive quarters of decline in a countrys real (inflation-adjusted) gross domestic product (GDP) as a practical definition of a recession. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators."