What is a recession?

A recession is defined as a significant decline in economic activity that lasts for an extended period, typically visible through a decrease in GDP, income, employment, manufacturing, and retail sales. During a recession, the economy experiences a contraction, which can lead to increased unemployment and reduced consumer spending. This downturn often reflects underlying issues in the economy, such as rising inflation or decreased consumer confidence, which hampers economic growth.

The other options imply scenarios that do not align with the traditional economic definition of a recession. While a period of rapid economic growth reflects an expansion rather than a contraction, a temporary slowdown in production does not necessarily meet the criteria for a recession, as it may not be sustained or significant enough. Similarly, a rise in consumer confidence generally correlates with economic improvement, not a decline. The designation of a recession is reserved for those notable decreases in overall economic activity, making the first choice the most accurate representation of the concept.