Depression Vs Recession Definition

One could say that while a recession refers to the economy falling down a depression is a matter of not being able to get up.

Depression vs recession definition. A depression is a period during which business employment and stock market values decline severely or remain at a very low level of activity. A depression is when you lose yours it was first used in print by teamsters union president dave beck 1894 1993 it is widely attributed to henry trueman who began using it shortly after in 1954. A recession is when your neighbor loses his job. One popular definition of the difference between recession and depression is.

In economics the words recession and depression are used to refer to economic downturns. Regardless of which one we officially reach it s becoming clear that low interest rates and a 1 200 check won t be enough to fix the financial hardship that millions of americans are experiencing today. A recession is an economic downturn that is less severe. Recessions can also be more localized while depressions can have global reach.

Compared to a recession a depression is much more severe and sustained. A recession is economic contraction that lasts at least six months while a depression is longer and more severe. A depression is any economic downturn where real gdp declines by more than 10 percent. A common rule of thumb for recessions is two quarters of negative gdp growth.

The old adage is that a recession is when your neighbor loses his job and a depression is when you lose yours. By this yardstick the last depression in the united states was from may 1937 to june 1938 where real gdp declined by 18 2 percent. A recession is a downtrend in the economy that can affect production and employment and produce lower household income and spending. On the other hand a depression is a prolonged period of economic recession marked by a significant decline in income.

Although recessions do happen our current economy is fundamentally strong. Since 1854 the united states has experienced 33 recessions and only one depression. Spending employment investments profits and income all decrease. In short a recession is simply a short term economic trough but a depression is a recession on steroids.

An economy in depression suffers a general reduction of total output. There are warning signs for each.