Economics terminology that differs from common usage

In any technical subject, words commonly used in everyday life acquire very specific technical meanings, and confusion can arise when someone is uncertain of the intended meaning of a word. This article explains the differences in meaning between some technical terms used in economics and the corresponding terms in everyday usage. Economists commonly use the term recession to mean either a period of two successive calendar quarters each having negative growth of real gross domestic product—that is, of the total amount of goods and services produced within a country—or that provided by the National Bureau of Economic Research (NBER): "...a significant decline in economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment, industrial production, and wholesale-retail sales." Almost all economists and policymakers refer to the NBER's determination for the precise dates of a U.S. recession's beginning and end. In contrast, in non-expert, everyday usage, recession may refer to a period in which the unemployment rate is substantially higher than normal. Labor economists categorize people into three groups: employed—actually working at a job, even if part-time; unemployed—not working, but looking for work or awaiting a scheduled recall from a temporary layoff; and not in the labor force—neither working nor looking for work. People not in the labor force, even if they have given up looking for a job despite wanting one, are not considered unemployed. For this reason it is often thought, especially when a recession has persisted for a sustained period, that the unemployment rate understates the true amount of unemployment because some unemployment is disguised by discouraged workers having left the labor force. The everyday usage of the word unemployed is usually broad enough to include disguised unemployment, and may include people with no intention of finding a job. For example, a dictionary definition is: "not engaged in a gainful occupation", which is broader than the economic definition.