The Economist Redefines Recession

From the economist.com:

To the average person, a large rise in unemployment means a recession. By contrast, the economists’ rule that a recession is defined by two consecutive quarters of falling GDP is silly. If an economy grows by 2% in one quarter and then contracts by 0.5% in each of the next two quarters, it is deemed to be in recession. But if GDP contracts by 2% in one quarter, rises by 0.5% in the next, then falls by 2% in the third, it escapes, even though the economy is obviously weaker. In fact, America’s GDP did not decline for two consecutive quarters during the 2001 recession.

However, it is not just the “two-quarter” rule that is flawed; GDP figures themselves can be misleading.

Thus:

This suggests that it makes more sense to define a recession as a period when growth falls significantly below its potential rate.

I really don't like "potential rate" slapped at the end, I believe I like "expected rate", in which tightly coupled with population growth and "realistic" prevailing wages.

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