The clearest sign of a recession is a steady increase in job losses and high unemployment.

One signal that a recession has become a depression? When GDP declines more than 10%

There’s no single definition for recessions or depressions, but both are marked by sustained periods of declining economic activity. Depressions are more severe than recessions.

A recession is commonly defined as two straight quarters of shrinking GDP

Recessions are sustained downturns in the economy. They’re significant, widespread, and there’s no single, surefire way to define or predict them.

Recessions are often called retroactively, rather than while they’re occurring

Because recessions are recognized when a wide array of economic factors like falling GDP and high unemployment converge, they are often officially recognized after the fact.

The Sahm rule attempts to predict recessions based on unemployment trends.

The US Bureau of Labor Statistics releases a monthly 'jobs report' that tracks the unemployment rate, the number of Americans currently on payroll, and more.

When consumers think an economic downturn is looming, the 'lipstick index' economic theory argues that sales of more affordable luxury items (such as lipstick) go up.

The men’s underwear index predicts recessions based on men’s underwear sales

Internet users have been using some nontraditional indicators to predict whether a recession is imminent, including the return of so-called “recession pop.”

Economists define deflation as a sustained decline in prices across an economy

Deflationary periods are characterized by broad, significant price declines. The Federal Reserve can monitor deflation by tracking prices through price indexes, such as the Consumer Price Index (CPI), which characterizes the average costs for consumers each month.

Why the employment report matters to Wall Street

On the first Friday of every month, the US Bureau of Labor Statistics releases the infamous "jobs report." The report essentially tracks how US employment is doing, from the unemployment rate to the number of people in the US currently on payroll. But most importantly, the jobs report has major implications for the economy at large. To find out how this monthly report impacts Wall Street, read this article.

Recessions are considered to be inevitable by modern economic standards

Recessions are caused by imbalances in the market and are guaranteed to happen in capitalist systems, but predicting them is a complex task.

The US has been through 34 recessions since 1854

From 1855 to 2020, the average US recession lasted for an average of 17 months. But in the 20th and 21st centuries, the average recession length has shortened, decreasing to 14 months.

A V-shaped recovery from a recession is the most common kind

When charted, recession recoveries resemble letters including V, U, W, L, and K. For instance, an L-shaped recovery involves a steep decline that slowly reverses.

Explore an interactive tool that reveals why Americans are unemployed—almost 30% of unemployed Americans ages 25 to 54 cited being laid off as the reason for their unemployment, for instance.

Roughly $5T of stimulus money flooded the economy during the pandemic

Recessions can last anywhere from months to years. To encourage economic growth, governments use policy levers such as lowering interest rates or introducing a stimulus. Economists credit massive stimulus funds for helping the economy quickly recover from a recession during the COVID-19 pandemic.

The unemployment rate is calculated using a monthly survey that the Bureau of Labor Statistics uses to identify those who are employed or actively looking for work.

Over 1.9 million Americans—more than a quarter of those unemployed—have been classified as 'long-term' unemployed in a given month in 2026, meaning they've been out of work for at least 27 weeks.

COVID-19's shock to employment rates sparked some economists to fear deflation

COVID-19 simultaneously disrupted the supply chain and the labor market. Since the unemployment rate had hit record highs, some economists were worried that the supply chain would recover before the labor market. If that had happened, businesses would have been producing goods, but no one would have been able to buy them because they wouldn't have the disposable income to do so.

Experts don't believe upbeat tunes, called 'recession pop,' are legitimate recession indicators

Social media users have begun deeming pop music by the likes of Kesha and Katy Perry a "recession indicator" as they try to predict the next economic downturn.

The Federal Reserve fought the Great Recession primarily with quantitative easing and repurchasing agreements.

Why there's a snack recession

Inflation and economic uncertainty have driven many Americans to make cuts to their snack budgets, according to reports from major food manufacturers like General Mills, JM Smucker, and Campbell's. Major retailers have also observed lower-income consumers cutting back on nonessentials due to the macroeconomic environment.

Unemployment is generally sorted into four different types: frictional, cyclical, structural, and institutional.

An inverted yield curve has preceded every recession that’s occurred in the last 50 years

Prolonged yield curve inversions can predict recessions, but even brief inversions can cause investors to react with knee-jerk reactions.

Indicators of economic bubbles include euphoric narratives and extreme valuations.

Falling demand and lower costs of production cause deflation

"Falling demand" refers to anything that changes someone's willingness to spend money on goods and services. Global recessions, fears of a worldwide recession, and a fall in the money supply are all factors that could lead to falling demand. Likewise, lower production costs allow companies to increase production, which can lead to a surplus in supply.

US homeownership rates declined from the start of the Great Recession through 2016.

The Great Depression is one of history's most notable periods of deflation

The stock market crash of 1929 helped trigger a period of deflation in the United States by creating a drastic decrease in the total money supply. Because of the United States' central role in the world economy, virtually every single country was impacted by the recession.

Housing 'starts'— new constructions—signal the health and future of real estate

The Federal Reserve Economic Data, or FRED, tracks monthly “housing starts,” the number of new residential construction projects being built. Some argue this data can serve as an economic barometer.

In 2023, the US money supply fell at its fastest rate since the 1930s

The money supply tracks how much cash, as well as electronic funds like savings accounts, is circulating through the economy. And a downward turn can be a bad sign.

The US unemployment rate soared to over 24% during the Great Depression, the highest in recorded history.

Read about the evolution of the S&P 500 and its recession recovery

Since the S&P 500 is considered a bellwether index (meaning it represents the health of the US economy), its value is important for investors in both bull and bear markets. The S&P 500 has been impacted by recessions and downturns, from the 1970s oil crisis to the dot-com crash of the early 2000s.

Explore an interactive tool that provides regularly updated information on labor market outcomes of recent college graduates.

'Good deflation' happens when prices naturally track with supply, meaning prices change gradually

This tends to make products and services more affordable and normalizes the standard of living. Bad deflation usually happens when there are sudden changes to either supply or demand. Near-zero [interest rates helped create the real estate bubble that sparked the Great Recession when it crashed](https://www.youtube.com/watch?v=LMo9mD8j7IA&t=91s) Because deflation distorts the value of money, deflation is particularly harmful for borrowers. Low interest rates made it easy for businesses and everyday people to take on enormous debt, which exacerbated the effects of the recession.

Many economists see Black Friday as a litmus test for consumer confidence

Some investors and analysts look at Black Friday’s sales numbers as a way to gauge the overall health of the retail industry—and consumer confidence at large. However, others don’t believe Black Friday results have a particularly significant impact on markets, arguing that the figures only cause short-term gains or losses.

Some economists argue the national debt is not a critical concern

The US has the largest national debt and one of the highest debt-to-GDP ratios. These vitals have long been considered a sign of poor fiscal health, but economists are beginning to shift their attention to interest rates to evaluate national debt.

In 2007, Bridgewater Associates warned of an impending financial crisis

Ray Dalio even presented his concerns to the US Treasury Secretary. In late 2025, Dalio warned of another recession, in line with models he created in his book "How Countries Go Broke: The Big Cycle."

Government shutdowns can cost the US economy billions

The Congressional Budget Office estimated that the 2018-19 shutdown reduced economic output by about $11B, including a permanent loss of roughly $3B

The Federal Reserve follows the health of the US economy by tracking the money supply

That includes all of the physical and electronic money in circulation. It tracks not only US coins and bills, but also the money that moves through bank deposits. The Fed uses metrics called trackers to follow different types of transactions through the money supply.

25% of US households had no regular income as of 2024

Some states had higher shares of no-income households than others: West Virginia, for instance, had a national high of 34% of households with no income. These states tend to have older populations, higher rates of disability, and lower median incomes overall. In such contexts, a larger portion of households rely on non-earned income sources or report no income during the survey period.