← Recession tracker · Teaching resources
Read the signals together
Grades 9–12 · 30 minutes · Print this page using your browser. Expand the teacher key before printing to include it.
Question: can one number tell us we are in a recession?
These are fictional economies, not current country readings. GDP changes compare each quarter with the previous quarter, without annualizing. Inflation compares prices with a year earlier. Unemployment is the share of the labor force seeking work without a job.
| Indicator | Economy A | Economy B |
|---|---|---|
| Real GDP, previous quarter | −0.3% | +0.6% |
| Real GDP, latest quarter | −0.2% | +0.4% |
| Inflation, previous → latest | 5% → 3% | 2% → 4% |
| Unemployment, previous → latest | 4% → 5% | 5% → 4% |
Student worksheet
- Which economy meets the two-quarter contraction rule of thumb? Cite two figures.
- In Economy A, have prices fallen? Explain the difference between disinflation and deflation.
- Which economy shows weakening output and employment together? Calculate its unemployment change in percentage points.
- Can you calculate a recession probability or the Sahm rule from this table? What is missing?
- Write a three-sentence briefing: one observation, one interpretation and one limitation.
Use a separate sheet for answers. Then visit the live tracker and record each observation’s period and source. Do not compare a quarterly GDP reading with a monthly labor figure as if they covered identical periods.
Teacher key and discussion guide
- A: real GDP falls 0.3% and then 0.2%. This is a rule of thumb, not an official U.S. recession determination.
- No. Prices are still 3% higher than a year earlier. Disinflation is slowing inflation; deflation is falling prices.
- A: unemployment rises 1 percentage point, from 4% to 5%. This is a 25% relative increase in the rate, a different calculation.
- No. A probability needs a specified statistical model and its inputs. The Sahm rule needs the three-month unemployment average and its lowest three-month average in the prior 12 months; two isolated readings are insufficient.
- Example: “A has two quarters of declining output and rising unemployment. Those signals suggest weakening activity. More evidence about the breadth, depth and duration of the decline is needed.” Award credit for evidence and uncertainty, not a confident recession label.
Extension: explain why falling inflation can accompany either improving supply or weakening demand. The table alone cannot identify the cause.
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Download the free GDP and recessions teaching sample · Open the GDP calculation lab