US Recession

I was reading an article yesterday that posed the question of whether the recessions in the United States are getting milder and milder.  It interested me to the point where I started to look into the factors involved in determining whether we are in a recession or not.  The term recession is used liberally in many conversations yet I never really knew the factors that went into determining this.  I'll try to explain it now. 

What is the definition of a recession? According to the financial press, a recession is defined as two consecutive quarters of decline in real GDP.  There are different interpretations of a recession though. The National Bureau of Economic Research also considers the depth as well as the duration of the decline of economic activity.  They also use a broader range indicators, not just the real GDP.  

What is real GDP? It is the inflation adjusted value of all goods and services produced in a country.

So if you want to find out if the United States is in fear of falling into a recession as defined by the financial press, you could easily look at the data freely available from the Bureau of Economic Accounts at http://bea.gov specifically the Real Gross Domestic Product, Chained Dollars report.  Using the simplest definition of recession, we could look at the real GDP numbers (in billions of dollars) from back in 1990-1991.  The highlighted numbers show the quarters in which we saw a decline in real GDP:

Based on this, we were in a recession from the beginning of the last quarter of 1990 until the end of the first quarter of 1991, about 6 months.   

So are we close to a possible recession?

I'm not qualified to answer that but the real GDP in the US has continued to rise with no decline as evidenced by the below chart of GDP since the end of the third quarter, 2006:

So when was the last recession in the United States as defined by the National Bureau of Economic Research? 

They use a comprehensive method in determining recession and even though there were not two consecutive quarters of decline in the real GDP, they believe the last recession was from March 2001 until November 2001.

Here is a chart that I composed of previous recessions since the Great Depression with possible causes:

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