1640s, "act of receding, a going back," from French récession "a going backward, a withdrawing," and directly from Latin recessionem (nominative recessio) "a going back," noun of action from past participle stem of recedere "to go back, fall back; withdraw, depart, retire," from re- "back" (see re-) + cedere "to go" (from PIE root *ked- "to go, yield").
Sense of "temporary decline in economic activity," 1929, noun of action from recess (q.v.):
The material prosperity of the United States is too firmly based, in our opinion, for a revival in industrial activity — even if we have to face an immediate recession of some magnitude — to be long delayed. [Economist, Nov. 2, 1929]
Ayto notes, "There was more than a hint of euphemism in the coining of this term."