Chapter 8: The Cream of the Crop of Business Cycle Analysis: Correct Prediction of a Recession

Recession is defined in different ways. There is not the unique universally accepted definition. Usually, a variety of indicators are used to identify a recession. There may already be a recession in the manufacturing sector – as was the case in the USA and the Eurozone in 2014 – which then does not always lead to a recession in the economy as a whole.

The most common description of a recession is probably the decline in GDP in two quarters in a row. After the second negative growth in quarterly changes, one speaks of a ‘technical recession’ (beginning at the start of the first quarter with negative growth, what means about seven months ago). However, this is not the official term for a recession.