Tuesday, June 19, 2012

IN THE FIRST QUARTER OF THE YEAR,REAL GDP WAS $400 BILLION;IN THE SECOND QUARTER, IT WAS $398 BILLION; IN THE THIRD QUARTER,IT WAS $399...

No, there has not been a recession, even though the Real GDP at the end of the year is lower than the Real GDP at the beginning of the year.  The reason for this has to do with the technical meaning of the term "recession."


For a recession to occur, there has to be a drop in Real GDP, but that drop has to happen in two consecutive quarters.


In the example you give, Real GDP dropped in the second quarter, but then it went up in the third before dropping again in the fourth.  So, technically, this is not a recession.

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