A recession, a period of decline in economic activity, has become a pressing concern with the recent tariffs imposed by the Trump administration. But what exactly is a recession, and who decides when it applies?
According to economists, a recession is characterized by two consecutive quarters of decline in a nation’s gross domestic product (GDP), or a “significant decline in economic activity that is spread across the economy and that lasts more than a few months,” as defined by the National Bureau of Economic Research (NBER).
The NBER, a nonpartisan research organization, plays a crucial role in documenting economic cycles, including recessions. Its Business Cycle Dating Committee, composed of top American economists, has been declaring the beginning and end of economic cycles since 1978.
There is no fixed rule about how long it takes for the NBER to identify a recession after a decline has started, with determinations taking anywhere from four to 21 months. The organization waits until it can assign an accurate peak or trough date to confirm the existence of a recession.
Recessions can have far-reaching consequences, including lower employment, deteriorating stock market results, and higher borrowing costs. Mark Zandi, chief economist at Moody’s Analytics, warned that consumer confidence and discretionary spending are already on the decline, with the possibility of even broader tariffs potentially speeding up the path to a recession.
The United States has experienced 34 recessions since 1857, with varying lengths ranging from two months to over five years. The post-WWII U.S. has averaged a recession every 6.5 years, according to Kiplinger.
While depressions are more severe and rare, characterized by widespread unemployment and major pauses in economic activity, the NBER does not specifically identify them. The last reported depression occurred in the 1930s.
As the economic landscape continues to evolve, it’s essential to understand what a recession entails and who declares it. With over 50 countries reaching out for negotiations on the tariffs, the situation remains fluid, and its impact on the economy is still uncertain.
Source: https://www.npr.org/2025/04/07/nx-s1-5354927/recession-trump-tariffs