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Who Declares Recession..

Who Declares Recession?

The term recession comes from the Latin word’ recessus,’ which means ‘withdrawal’ or ‘retreat,’ and is often used to describe a general decline or setback. 

A recession is a substantial and extended period of economic decline in which there is a drop in economic activity, such as a decrease in GDP, increased unemployment rates, lower consumer spending, decreased investment, and overall poor economic development. 

A recession can have long-term economic consequences, typically taking years to recover from it, and can significantly impact individuals, businesses, and governments. 

But who decides that it’s a recession?

In this blog, we will learn about the organization that officially declares a recession. We will also try to understand the process that economists follow and how they declare the beginning and end of a recession.

To start with, let’s discuss the agencies involved in declaring recession. 

Role of Government Agencies in Declaring Recession


Role of Government Agencies in Declaring Recession

Rather than a single government, private agency, or organization, a group of economic experts typically declares a recession. Several government and corporate organizations play a crucial role in declaring a recession. One of the most prominent organizations that declare recessions is the National Bureau of Economic Research (NBER). 

Following are the roles various agencies play in declaring a recession:

  1. Monitoring Economic Indicators– Government organizations such as the National Bureau of Economic Research (NBER) and the Bureau of Labor Statistics (BLS) keep a close eye on economic indicators such as GDP, employment rates, inflation rates, and consumer expenditure.
  2. Data Analysis- National Bureau of Economic Research (NBER) and Bureau of Labor Statistics (BLS) examine economic data and trends to evaluate whether there has been a significant drop in economic activity across the country, and they analyze the data accordingly. 
  3. Detecting A Recession- NBER and BLS may declare a recession if there has been a considerable fall in economic activity. A recession is usually defined as two-quarters of negative GDP growth, and these organizations work on predicting & determining the same.
  1. Declaring A Recession- Once a recession has been determined, the agency will make the announcement public. This announcement has the potential to have a substantial influence on financial markets as well as consumer confidence.
  2. Offering Advice- Agencies may also offer advice on how to manage the recession, including recommendations for businesses and individuals on how to lessen the adverse effects of the economic slump.
  3. Revisions To The Declaration- Authorities may update their recession announcement whenever new data emerges. For example, if economic activity begins to improve, the agency may proclaim that the situation is improving. 

As agencies are engaged in the process of declaring a recession, they play a crucial role in monitoring economic activity, analyzing data, and providing guidance so that individuals and businesses can navigate the economic downturn as effectively as possible.

Government agencies play all the above roles. Now, let’s find out the role of private agencies in declaring recessions. 

Role of Private Organizations in Detecting Recession 


Role of Private Organizations in Detecting Recession 

Following are the roles of private organizations in detecting an approaching downturn:

  1. Data Collection And Analysis- Private organizations, such as think tanks and research firms, also collect and analyze economic data, providing insights into the state of the economy and potential indicators of a recession.
  2. Business Sentiment Surveys- Private organizations such as the National Federation of Independent Business (NFIB) conduct business sentiment surveys that provide insight into small businesses’ confidence in the economy. This can be an early indicator of a potential recession.
  3. Risk Assessment And Management- Private financial institutions such as banks and insurance companies play a critical role in assessing and managing economic risk. They may take actions such as increasing reserves or tightening lending standards to mitigate potential losses in the event of a recession.
  4. Investment And Lending- Private organizations such as banks, investors, and venture capitalists make decisions about where to invest and lend money, which can affect the overall health of the economy. For example, if they pull back on investment or lending during a recession, it can exacerbate the economic downturn.
  5. Public Relations And Communication- Private organizations may also play a role in communicating information about the economy to the public, as well as shaping public perception of the economy.

It’s worth noting that the role of private organizations in a recession can be complex and may depend on the specific actions taken by these organizations and the broader economic context. 

But there is always controversy surrounding the global recession in every declaration, whether it is by a private or government organization. Let’s discuss the same next. 

Shortcomings in Recession Declarations


Shortcomings in Recession Declarations

When declaring a recession, a lot of issues or controversies might occur. Some of them are as follows:

  1. Timing- There can be disagreements over when a recession officially begins and ends. This is because there is often a lag between when economic conditions change and when official data is available to confirm the change. Additionally, the criteria used to define a recession, such as a decline in GDP, can be subject to interpretation.
  2. Political Considerations- Governments and central banks may be reluctant to declare a recession because of the potential political fallout. This can be particularly true for governments that are up for re-election, as a recession can be seen as a failure of economic policy.
  3. Impact on Markets- Declaring a recession can also have a negative impact on financial markets, as investors may become more risk-averse and sell off assets. This would make the market more volatile. 
  4. Difficulty in Identifying the Cause of Recession- Many macroeconomic factors are at play in an economy, and it can be difficult to identify the specific cause of a recession. This can make it difficult to craft effective policy responses to a recession.
  5. Inaccuracy in Measuring Overall Economic Activity- It is often hard to measure the overall economic activity as there are many variables to consider. GDP data may not accurately reflect the well-being of a country’s citizens, especially in developing countries where a large proportion of economic activity takes place in the informal sector.

All the reasons mentioned above are from the controversies that happened during the declaration of the past recessions. It is also because there are no standard criteria for determining when a recession occurs; these may differ from country to country or within different sub-regions of a country.

Let’s take a look at how all of these pronouncements could affect the economy.

Impact of Recession Declaration on the Economy


Role of Government Agencies in Declaring Recession

Declaration of recession can impact the whole economy in the following ways: 

  1. Decrease in Investment and Borrowing- When the recession is declared, businesses and consumers are less likely to invest in new projects or take out loans, as they become more risk-averse. This declaration could lead to a decrease in economic growth and an increase in defaults.
  2. Increase in Bankruptcies and Defaults- Recession declaration can lead to an increase in bankruptcies and defaults as businesses and individuals struggle to make payments on loans and other debts.
  3. Increase in Poverty and Inequality- The declaration of a recession can lead to a rise in poverty and inequality, as unemployment and decreased economic activity can disproportionately affect lower-income individuals and communities.
  4. Decline in Business and Consumer Spending- Consumers and companies tend to spend less money during a recession as they become more cautious and worried about the future. And after the declaration of recession, things could get worse. 

Thus, these are the economic impacts of declaring a recession. In the final section, let us look at an investment alternative that can help you & your portfolio combat the recessionary pressure.

The Bottom Line  


This blog explored the reasons behind the recession declaration from scratch. Starting from NBER and discussing its role in declaring this bad news called recession, we have discussed the role played by government and private-based organizations in detecting recession which is followed by discussing the shortcomings in declaring recession. 

Declaring a recession is one thing, but preparing yourself for it is completely different. Multiple agencies can declare a recession, but your financial future can only be declared by you and the companies that you pick along the way. One such company that will assist you through the thick and thin of a downturn is Secvolt. Be it the results in terms of numbers or your legacy, this quant hedge fund serves its clientele with the best. 

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Elevate your financial game & join the ranks of elite investors with Secvolt’s exclusive newsletter. 

Don’t just dream of wealth; achieve it with Secvolt. Schedule a call today for personalized guidance on your investment strategy and join the ultra-successful.

Ready to unlock your wealth’s truest potential & cherish affluence?

Secvolt, our hedge fund, sets the bar high with a record-breaking performance of 262% returns in 2022. With the brilliance of our highly advanced quant models and the efficiency of our risk mitigation protocols, we are yet to see a loss!

We’re the perfect ally to help you succeed financially and build the lasting legacy you have always aspired for.

Get in touch today. YOUR LEGACY AWAITS YOU…

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!