The leading institutes define a recession in a somewhat more complicated way: They ask how high Germany’s economic output would be in the ideal case, if all workers and machines were used exactly as intended. This is the so-called production potential. If the economy is in crisis, as is currently the case, it produces less than it actually could according to its potential. If this underutilization increases for two quarters in a row, the institutes speak of a technical recession.
This has already been the case for nine months, from the third quarter of 2021 to the first quarter of 2022. According to the institute’s forecasts, however, underutilization has been decreasing again since then, and from 2023 Germany should even find itself in overutilization.