A period of declining real GDP, accompanied by lower real income and higher unemployment.

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This scenario describes a recession. When real GDP falls, overall economic activity is shrinking, which tends to lead firms to cut back production and lay off workers. That rise in unemployment means more people have jobless benefits or lower earnings, so real incomes decline as prices may still be rising or wages lag behind. The combination of shrinking output, higher unemployment, and lower real income is the classic pattern economists associate with a recession. By contrast, an expansion would show rising GDP and incomes with unemployment falling, a depression would be a much more severe, long-lasting downturn, and stagflation would involve high inflation along with stagnation and unemployment, which isn’t indicated here since inflation isn’t mentioned.