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What to Know About Recessions as the World Heads Into One

Shoppers wait in line at a Costco location in Hawthorne, California on March 14.

Shoppers wait in line at a Costco location in Hawthorne, California on March 14.

Photographer: Patrick T. Fallon/Bloomberg
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With the sudden cessation of economic activity across the globe, talk about the next recession has shifted -- from whether and when, to how long and how bad. The coronavirus pandemic has stifled travel, shuttered businesses, canceled sports events and sent stock markets into freefall. Life-saving containment measures have sharply curbed economic output, providing a shock many believe will trigger a global downturn.

The dictionary definition is a period when economic output contracts for two straight quarters. The National Bureau of Economic Research’s Business Cycle Dating Committee, which makes the official U.S. determination, uses a different approach, considering factors such as inflation-adjusted GDP, employment, industrial production and income. The International Monetary Fund, in designating recessions on a global scale, looks at several indicators including a decline in inflation-adjusted per-capita GDP that’s backed up by weakness in industrial production, trade, capital flows, oil consumption and unemployment.