The economic situation in which a nation's gross domestic product or production is sustaining a negative increase for for two successive three month or 6 months is termed as an economic recession. The National Bureau of Economic Research 'NBER' states, "recession is a substantial decline in economic activity lasting more than a few months". Economic recession can last for months and may reach up to 2 years, although one that is short is called 'economic correction', whereas a sustained recession turns into a economic depression. There are complex reasons as well as elementary causes why economic recessions happen and on the eve of any economic slowdown, there tends to be too much production, where supply exceeds the demands of individuals for wares or services.

This condition, at first, induces companies to increase their prices and people then lose confidence and be unsure in purchasing products of any sort. Another instance for this factor driving recession will be the psychological impact the events of the September 11 attacks on consumers and the individuals. Some economists suggest that recession may not only be caused by outcomes that have big or huge impact on the people because outcomes that hurt specific businesses or industries can also cause recession. Leading innovations or modification in a price of a major factor needed in the completion of the product can have dramatic effects on some businesses.

Then again, over consumption can also be a contributing factor, when spending more than is necessary can lead to recession and hardship for large numbers of individuals and families. An instance will be the major fuss over the expenditure of The United States in the Iraq war so economic experts are warning everybody that America should be particular with their expenditure in the future. Government economic policies can be used to avoid the situation but failure to provide good economic policies can lead to recession and there are a number of mistakes that can be made in economic plans. Some lead to an expansion and collapse which means the economic system is moving at an unsustainable pace and inflation is increasing.

Sometimes the people who make the rules make mistakes and it is the economic advisor's fail to be intent enough to observe the increasing cost of products and services and onset of recession. Administrators frequently regard the onset of recession as just a slow economic development which will right itself but failure to deal with this may lead to more economic catastrophes. This is not just an American matter and the U.N. declared an alert that there might be a worldwide economic slowdown as early as January 2008. According to the United Nations, global economic growth for 2008 is estimated to be 3.4 percent, following on from the down movement since 2006 of 3.9 percent and 3.7 percent in 2007. The collapsing of the housing market bubble of The United States and the spreading credit crisis of other countries are some contributing factors for a global recession. Measures can be undertaken to prevent this scenario totally but the most difficult part is to recuperate from the affects of this economic upheaval.

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