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What is a recession?

A recession is the term used to describe a fall in economic activity and negative growth for a prolonged period, usually longer than two consecutive quarters. Arguably, the economic metric with the most weighting is GDP (Gross Domestic Product); continued decline of GDP is one important indicator of an economic recession. Other indicators include income stagnation and high unemployment rates, a fall in consumer demand, and reduced goods manufacturing.

Recessions are considered a normal part of a capitalist economy, they are part of the business cycle. Despite this, there is still no clear way of predicting economic recessions beyond monitoring the aforementioned factors.

Financial crisis, dramatic changes to external trade, and the popping of an economic bubble are all events which can trigger a recession. Each of these events can inhibit spending to the point of economic torpor.


Recession News from LGIM

As one of the UK’s leading investment managers, LGIM offers knowledge and experience that can bring real benefit to investors looking to understand economics, policy and politics.

Find the latest research on the effect of recessions in countries around the world, from predictions to explanations.

Our Asset Allocation team includes dedicated and accomplished US, European and Global economists, whose focus is to assess the macroeconomic environment across the developed world. This includes researching government policy, emerging political trends, as well as the outlook for economic growth and inflation. Our economists then work with our team of strategists and portfolio managers to translate their views into what this means at a portfolio level.