EXPLAINER: How will we know if the U.S. is in recession?

WASHINGTON (AP) — The second consecutive quarter of economic growth that the government reported Thursday underscored that the nation isn't in a recession despite high inflation and the Federal Reserve's fastest pace of interest rate hikes in four decades.

Yet the U.S. economy is hardly in the clear. The solid growth in the October-December quarter will do little to alter the widespread view of economists that a recession is very likely sometime this year.

Increased borrowing rates and still-high inflation are expected to steadily weaken consumer and business spending. Businesses will likely pare expenses in response, which could lead to layoffs and higher unemployment. And a likely recession in the United Kingdom and slower growth in China will erode the revenue and profits of American corporations. Such trends are expected to cause a U.S. recession sometime in the coming months.

Still, there are reasons to expect that a recession, if it does come, will prove to be a comparatively mild one. Many employers, having struggled to hire after huge layoffs during the pandemic, may decide to retain most of their workforces even in a shrinking economy.

Six months of economic decline is a long-held informal definition of a recession. Yet nothing is simple in a post-pandemic economy in which growth was negative in the first half of last year but the job market remained robust, with ultra-low unemployment and healthy levels of hiring. The economy's direction has confounded the Fed's policymakers and many private economists ever since growth screeched to a halt in March 2020, when COVID-19 struck and 22 million Americans were suddenly thrown out of work.

Inflation, the economy's biggest threat last year, is now showing signs of steadily declining. Used and new cars are becoming less expensive. Price increases for furniture,...