Business: What Is a Recession?

One reason that economists can differ sharply over whether the U.S. is in a "recession" is that there is no simple, numerical definition of the term. Herbert Stein, chairman of the Council of Economic Advisers, offers a qualitative description: "An extended, substantial and widespread decline in aggregate economic activity, but one less severe than earlier 'depressions.' " The job of determining just which downturns belong in that category has fallen to the National Bureau of Economic Research, whose word on the subject is practically law in the profession.

The NBER has classified five post-World War II...

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