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In this latest Yahoo Finance original Economist Mohamed El-Erian breaks down the definition of a recession.
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BREAKING: Recession News

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As we approach the end of 2021, there is still a great deal of uncertainty about the state of the global economy. While some countries have seen significant growth in recent months, others are still struggling to recover from the effects of the COVID-19 pandemic. This has led many experts to ask whether we are currently in a recession or are heading into one.

The official definition of a recession is two consecutive quarters of negative economic growth. By this standard, many countries experienced a recession in 2020 as a result of widespread shutdowns and reduced economic activity. However, as governments around the world have rolled out vaccines and eased restrictions, many economies have rebounded. In fact, some countries have seen record growth rates in recent quarters, fueled by pent-up demand and government stimulus.

However, there are still significant risks to the global economy that could trigger a new recession. One of the most significant of these is inflation. As supply chain disruptions and labor shortages have driven up prices for goods and services, central banks have been forced to grapple with rising inflation rates. This has led many to fear that central banks will raise interest rates to combat inflation, which could slow economic growth and lead to a recession.

Other factors that could contribute to a recession include geopolitical tensions, trade disputes, and rising debt levels. Many countries are still struggling to pay off debt accumulated during the pandemic, which could limit their ability to respond to future economic shocks. And as the world becomes increasingly interconnected, any political or economic turmoil in one country could quickly spread to others, leading to a broader recession.

So, are we in a recession or heading into one? The answer is not clear-cut. While many countries are currently experiencing growth, there are still significant risks to the global economy that could lead to a recession. The key question is whether governments and central banks can continue to manage these risks and sustain economic growth in the coming months and years. Only time will tell whether the world can escape another recession or whether we are heading into another period of economic turmoil.