Recession

A recession is a significant, broad decline in economic activity lasting more than a few months, visible in GDP, employment, and industrial production. In the US it is formally dated after the fact by the National Bureau of Economic Research, not by the popular shorthand of two straight quarters of negative GDP growth.

Stocks often move ahead of the economy in both directions, falling before a recession is officially recognized and starting to recover before it officially ends, because markets price expectations rather than the present. That lead-lag relationship is why waiting for a recession to be confirmed before reacting is usually too late.