How to Search For Information You Need
In general, finding information free on search engines requires a lot of patience and is time consuming. Free websites most likely provide only limited information if you are searching for something important. The best choice is to buy it because bought information is usually written by specialists and is copyrighted. [August 13, 2008 10:25:46 am] By Chic Ngo
The Difference Between a Recession and a Depression
By Clay Wilson IV
The U.S. based National Bureau of Economic Research (NBER) defines a recession more generally as a major decline in economic activity extended across the economy, lasting more than a few months. This would be evident in real GDP(Gross Domestic Product), real income, employment, industrial production, and wholesale-retail sales. A sustained recession could in fact become a depression.
The difference in the two.. a recession would be a decline in the Gross Domestic Product (GDP) for two or more consecutive economic quarters. A depression is any economic downturn where real GDP declines by greater than 10 percent. A recession is an economic downturn that is less rigorous.
Before the Great Depression of the 1930s any downturn in economic activity was referred to as a depression. The term recession was developed in this period to tell the difference between periods like the 1930s from smaller economic declines that occurred in 1910 and 1913. This leads to the simple definition of a depression as a recession that lasts longer and has a larger decline in business productivity.
So how to tell the difference between a recession and a depression? A common rule of thumb for determining the difference between a recession and a depression is to look at the changes in Gross Domestic Products. According with use of this method, the last depression in the United States was from May 1937 to June 1938.
This is when real GDP declined by 18.2 percent. If we use this measure to compare, then the Great Depression of the 1930s can be seen as two separate events. An extraordinarily harsh depression lasting from August 1929 to March 1933 where real GDP went through a downward spiral by almost 33 percent. Then a period of recovery, followed by another less severe depression of 1937 through 1938.
The United States has not experienced anything close to a depression in the post-war period. The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP dropped by almost 5 percent.
In order for there to be a discussion of a recession there has to be a downward trend in the economy. There are many reasons a recession could start. Something might happen to shock the stock market or in the business world that scares consumers. Something that makes people hang on to their money instead of spending it. These are patterns that suggest hard economic times are coming. These are all patterns that we all are currently seeing and presently experiencing.
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