A six-month decline in business activity, employment, and stock prices is referred to as what?

A six-month decline in business activity, employment, and stock prices is known as a recession. This economic term specifically refers to a significant decline in economic activity that lasts for more than a few months, typically characterized by a reduction in gross domestic product (GDP), rising unemployment, and a drop in consumer spending and investment.

Recessions are recognized by economists and can be officially declared by organizations such as the National Bureau of Economic Research (NBER) in the United States. The duration of six months aligns with standard criteria used to identify a recession. It represents a broad downturn that can affect various sectors of the economy, leading to widespread economic distress.

The other terms do not adequately capture this specific economic phenomenon. A bubble refers to a market condition where asset prices rise significantly above their intrinsic value, often followed by a sharp collapse. A correction is generally a short-term decline in stock prices, usually defined as a drop of 10% or more from a recent peak, but it is not synonymous with an extended period of economic decline like a recession. An economic downturn is a more general term that might refer to any decrease in economic activity, but it does not have the specific duration and severity criteria that define a recession.