EXPLAINER: How do we know when a recession has begun?

WASHINGTON (AP) — The Federal Reserve sent a sobering message Wednesday after it announced its latest big interest rate hike: It plans to keep raising rates as long as it takes to conquer the worst inflation bout in decades — even at the risk of causing a recession in the process.

Its aggressive pace of rate hikes will increasingly make borrowing and spending costly for consumers and businesses. Job cuts and rising unemployment could follow. And eventually, as the job market steadily weakens along with the economy, a recession could follow.

Given the strength of the job market — the unemployment rate is still an exceedingly low 3.7%, with plentiful job openings — most economists say a recession seems months away, at least. But most of them nevertheless think an economic downturn is inevitable.

Late last month, the government updated its estimate of the economy's performance in the April-June quarter and confirmed its earlier estimate that the economy had shrunk for two straight quarters.

Six months of contraction is a long-held informal definition of a recession. Yet nothing is simple in a post-pandemic economy in which growth is negative but the job market strong. The economy's direction has confounded the Fed's policymakers and many private economists since growth screeched to a halt in March 2020 as COVID-19 struck and 20 million Americans were suddenly thrown out of work.

Even as the economy shrank over the first half of this year, employers added 2.7 million jobs — more than in most entire years before the pandemic struck. In August, the economy added 315,000 more. The unemployment rate, at 3.7%, is barely above a half-century low. Robust hiring and exceedingly low unemployment are hardly consistent with a recession.

Inflation, meantime, remains near its highest...