Friday Question: Recession or Depression?

Today’s question:  Are we (ie the U.S of A) in a Recession or a Depression? From good ole Wikipedia…

“A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with falling prices (deflation), or, alternatively, sharply rising prices (inflation) in a process known as stagflation. A severe or long recession is referred to as an economic depression. Although the distinction between a recession and a depression is not clearly defined, it is often said that a decline in GDP of more than 10% constitutes a depression.[1] A devastating breakdown of an economy (essentially, a severe depression, or hyperinflation, depending on the circumstances) is called economic collapse.”

“In economics, a depression is a term commonly used for a sustained downturn in the economy. It is more severe than a recession (which is seen as a normal downturn in the business cycle). Considered a rare but extreme form of recession, the start of a depression is characterized by unusual increases in unemployment, restriction of credit, shrinking output and investment, price deflation or hyperinflation, numerous bankruptcies, reduced amounts of trade and commerce, as well as violent currency devaluations. Unlike a recession, there is no official definition for a depression, even though some have been proposed. Generally it is marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced given current resources and technology (potential output). 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.”"

1 Comment

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One Response to Friday Question: Recession or Depression?

  1. Technically, for now it is a recession. If it lasts too long or goes to deep, it’ll be properly denominated a depression. Although I reckon most of us are pretty depressed already…

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