What do two consecutive quarters of negative economic growth indicate?

Two consecutive quarters of negative economic growth indicate a recession. This concept is a widely accepted criterion used to define recession in economic terms. During a recession, the economy experiences a decline in various economic activities such as consumer spending, business investment, and industrial production. As a result, unemployment rates tend to rise, and overall economic confidence diminishes.

The specific condition of experiencing negative growth for two quarters means that the economy is not just slowing down but is actively contracting, leading to broader adverse impacts on individual and business financial situations. This contraction is typically characterized by a decrease in gross domestic product (GDP), which is a critical measure of economic health. Recognizing these indicators helps policymakers and economists implement necessary responses to stabilize the economy and stimulate growth.