Posts Tagged ‘depression’

What’s the difference between a recession and a depression?

Wednesday, August 3rd, 2011

Before the 1930′s, recessions didn’t exist. This doesn’t mean that the economy behaved all that differently than it does now: up until that time, all economic declines were simply called depressions. But after the Great Depression, the term “recession” was coined to separate financial downturns on a lesser scale from those comparable to the catastrophe of the ’30′s.

The common definition of a recession is a drop in Gross Domestic Product (GDP) over two or more consecutive quarters. But economists tend to dislike this definition because it only looks  at GDP, and the two-quarter minimum means shorter recessions can go unnoticed. The National Bureau of Economic Research officially declares a recession after an in-depth analysis of financial information.

A depression is a recession in which the GDP declines by more than 10%, or one that lasts for more than three years. While recessions are pretty common, depressions are not. Only one developed country, Finland, has suffered a depression since the end of World War II. Depression has become a loaded term since the 1930′s catastrophe, and we want to make sure we use it only when the situation is appropriately grave.

The Great Depression is…

Friday, August 21st, 2009

The Great Depression is the severe, global, long-term economic downturn that began with a stock market crash in October 1929. In the United States, the stock market lost half of its value within a month of the crash’s start and unemployment remained as high as 17% in 1939, 10 years after the crash. The depression followed a decade of spectacular economic growth – the “roaring twenties” – and the U.S. economy didn’t really recover until the build-up to WWII in the 1940s.

A Depression is…

Friday, July 17th, 2009

A depression is a period of decline in a country or stock market that is especially long and severe. It is generally considered a decline in the GDP of 10% or more or for a period of longer than three years.