What is a period when the economy is not performing well and consumer spending decreases called?

The term that identifies a period when the economy is not performing well, accompanied by a reduction in consumer spending, is recession. A recession is typically defined as a decline in economic activity lasting more than a few months, visible in real GDP, income, employment, manufacturing, and retail sales.

During a recession, consumers tend to spend less due to uncertainty about the economy and their financial stability, leading to a decrease in overall economic demand. This decline can result in businesses cutting back on production and laying off workers, which further exacerbates the drop in consumer spending.

In contrast, stagnation refers to a prolonged period of little or no growth in the economy, while a depression is a more severe downturn than a recession, characterized by prolonged economic distress and significantly declining economic activity. Recovery is that phase which follows a recession when the economy starts to grow again. Understanding these terms helps clarify the dynamics of economic cycles and their impact on consumer behavior and business operations.