Recession

A recession is when an economy goes into reverse: output falls, businesses cut back, unemployment rises and people spend less. A popular shorthand is two quarters in a row of shrinking GDP, though official bodies, like the NBER in the US, look at a wider set of data.

Central banks usually respond by cutting rates, which tends to weaken the currency. Fear of recession also sends money into safe havens. Signals like an inverted yield curve and the Sahm rule are watched as early warnings.