A recession is a significant decline in economic activity that lasts for months or even years. During a recession, businesses sell fewer products, factories produce less, and many people lose their jobs. It's like the entire economy catches a cold: stores have fewer customers, companies make less money, and families have to be more careful about spending.

Economists may describe a recession as a period when the economy shrinks for two quarters in a row (a quarter is three months). During the Great Recession of 2007 to 2009, millions of Americans lost their jobs, many families lost their homes, and the stock market dropped dramatically. Recessions are a normal part of economic cycles, though nobody likes them.

When a recession hits, you might notice your parents talking more about money, or local businesses closing. The government and central banks try to fight recessions by lowering interest rates, which makes it cheaper for businesses to borrow money and hire workers. They might also increase spending on public projects like roads and schools to create jobs.

The opposite of a recession is an expansion or a boom, when the economy grows and more people find work. Understanding recessions helps explain why the economy sometimes feels strong and other times feels weak, and why adults pay such close attention to economic news.