What is a "recession," in simple terms?

A recession is a broad, sustained pullback in economic activity, not a single bad headline. It shows up across many measures at once: factories produce less, businesses spend less, and companies slow hiring or start layoffs. Economists commonly flag two consecutive quarters of shrinking GDP as a practical warning sign, though official recession calls also weigh employment, income, and spending data together rather than relying on one rule alone.

A single rough day on the stock market is just short-term volatility and can happen even in a healthy, growing economy; markets swing on news and sentiment far more often than the real economy actually contracts. A general rise in prices is inflation, a completely different phenomenon that can occur during growth or during a downturn.

Recessions and inflation can even happen together, a painful combination nicknamed "stagflation," where prices keep climbing even as jobs and output shrink.