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Economic recessions, also known as economic downturns or depressions, are periods of temporary economic decline during which trade, industrial activity, and employment fall. These periods are characterized by a significant drop in economic activity, often accompanied by a rise in unemployment and a decrease in consumer spending. Recessions are typically measured by a decline in Gross Domestic Product (GDP) over two consecutive quarters.

The causes of economic recessions can be multifaceted, including factors such as financial crises, changes in monetary policy, shifts in global trade patterns, and natural disasters. For example, the 2008 financial crisis was triggered by the subprime mortgage crisis in the United States, leading to a global economic downturn. Similarly, the COVID-19 pandemic has caused widespread economic disruptions, leading to recessions in many countries.

The impact of recessions on an economy can be severe, affecting various sectors, including manufacturing, retail, and services. Businesses may face reduced demand, leading to layoffs and closures. Consumers may experience reduced income and increased debt, leading to a decrease in spending. Governments may respond to recessions by implementing fiscal and monetary policies, such as tax cuts, increased government spending, and lowering interest rates, to stimulate economic activity.

Recessions are a normal part of the business cycle and are typically followed by periods of economic expansion. The duration and severity of recessions can vary, with some lasting for a few months and others lasting for several years. For example, the Great Depression of the 1930s was one of the longest and most severe recessions in history, lasting over a decade and affecting millions of people worldwide.