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In the USA, "officially" a group of 8 economists at the National Bureau of Economic Research decides when a recession starts. I suspect other countries have their own definitions. "The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." [1] Planet Money (podcast on NPR) did an episode [2] a little while ago about it that I recommend listening to. They talk with one of the 8 economists. It was honestly refreshing hearing the economist talk about it, I got the impression that it was a more neutral take on the circumstances rather than pushing a narrative. [1] https://www.nber.org/research/business-cycle-dating [2] https://www.npr.org/2022/06/24/1107581150/recession-referees |
And yes it much more complicated - especially it also depends on how much outside pressure NEBR has. I think there is a large pressure not to declare recession since we still have a high inflation and feds needs to continue raising rates.