In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time.[1][2] During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise.

Recessions are generally believed to be caused by a widespread drop in spending. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.

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A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. A recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression. There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the President himself, the head of the Federal Reserve, or the entire administration.

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The average person is not too adversely effected by a recession. Yes, unemployment may be on the rise, and if you are one of the unemployed, obviously you are affected. But, with unemployment at around 5%, I would say the average person is working.

The average person may not see much of a raise at the end of the year (or no raise at all). Sure that effects them, but in reality, it does not really impact most folks day to day lives. Maybe they put off that new TV for a few months, or something like that.

Investments will take a hit. But, a savvy investor will be diversified enough to weather out a recession. Move some money from stocks to bonds, or just wait it out, stocks should be a long term investment anyway. The real savvy investor will buy up stocks at bargain prices during a recession.

What about the cost of day to day items? Is inflation costing the average person. Well, sure it is. Groceries are going up in price. But, no one is starving as a result. They can overcome the price increase by buying chicken instead of steak for dinner this weekend.

So, I would say that the everyday Joe probably does not get too impacted by a recession.

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An extended decline in general business activity. The National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product. A recession affects different securities in different ways. For example, holders of high-quality bonds stand to benefit because inflation and interest rates may decline. Conversely, stockholders of manufacturing firms will probably see company profits and dividends drop.

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An economic decline in the country is known as recession.The effects of recession are always drastic. The most manufacturing companies used to stop their production as there is no demand and movement of their product in the market.