Definition of Recession

The Difference Between a Recession and a Depression

Two important questions: What is a recession? What is a depression?

Fact is, there isn't a universally agreed upon definition for either "recession" or "depression." No doubt if you were to ask 50 different economists to define the terms recession and depression, you would get at least 51 different answers for each term. And who wants to talk to 50 economists? Someone once said that "An economist is just an accountant without a personality."

Synonyms for recession:

 Synonyms for depression:

The standard definition of a recession:

"A decline in the Gross Domestic Product (GDP) for two or more consecutive quarters."

 

Microsoft Bookshelf says this for their definition of a recession: 

"An extended decline in general business activity, typically three consecutive quarters of falling real gross national product."

Microsoft Bookshelf says this for their definition of a depression:

"A period of drastic decline in a national or international economy, characterized by decreasing business activity, falling prices, and unemployment.

this is what you get for Definition of Recession according to Expedia:

In economics, the term/word recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters.

NBER (National Bureau of Economic Research) defines economic recession as:

 "A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."

According to Dictionary.com:

"A recession is a state of economic decline; a widespread decline in the GDP, employment and trade lasting from six months to a year."

The World Almanac® and Book of Facts says this about what is a recession:

"Recession: A mild decrease in economic activity marked by a decline in real GDP, employment, and trade, usually lasting 6 months to a year, and marked by widespread decline in many sectors of the economy."

Here are two more definitions by politicians — I trust them more than economists — relating to "depression" and "recession":

What is a Recession: The unpleasant and unacceptable face of capitalism.
— Edward Heath (b. 1916), British Conservative politician, prime minister. Speech, 15 May 1973, to House of Commons, London, on the high emoluments of company directors during a period of recession.

If we can "boondoggle" ourselves out of this depression, that word is going to be enshrined in the hearts of the American people for years to come.
— Franklin D. Roosevelt (1882-1945), U.S. Democratic politician, president. Speech, 18 Jan. 1936, to the New Jersey State Emergency Council, Newark.A recession is a period in which you tighten up your belt. In a depression you have no belt to tighten up. And when you have no pants to hold up, it's a panic.
— Unknown wise person

The stock market has predicted nine of the last five recessions.
— Paul Samuelson

Will This Recession Become a Depression? 

Question by John Heinzl of the Globe and Mail: What are we in? A recession? A depression?

Answer by John Talbott: We have to make up a new word for it because it is completely different from all the recessions we've been in, and yet right now it's not as severe as the Depression in the 1930s. But that doesn't mean it won't become a depression.

NOTE: John Talbott is the author of author of Contagion: The Financial Epidemic that is Sweeping the Global Economy and How to Protect Yourself from it: Talboott has been right before. His 2003 book, The Coming Crash in the Housing Market, warned about the dangers of subprime loans, the precarious state of Fannie Mae and Freddie Mac, and the potential for “economic disaster” years before the credit crisis became front-page news.
 

About The Great Depression:

What is a Depression: A sign of a Depression is when virtually no assets aside from cold hard cash and gold is considered safe.

The pessimist calls it the "Depression." The optimist calls it the "Great Depression."
—  Jim Martin in February 22 Mr. Boffo cartoon

The stock market crash of 1929 marked the beginning of the Great Depression. Unemployment increased and economic security was threatened. Farmers lost their land, workers lost their jobs, and many Americans lost their savings as thousands of banks closed. Campaigning on promises of a new deal for the American people, Democrat Franklin D. Roosevelt won the presidential election of 1932.

It's a recession when your neighbor loses his job; it's a depression when you lose yours.
— Henry S. Truman

The last Great Depression was worldwide, unemployment was 20 percent and the economic value of the majority of assets had declined.

The National Industrial Recovery Act (NIRA), a law enacted by the Congress of the United States in 1933, was one of the measures by which President Franklin D. Roosevelt sought to assist economic recovery during the Great Depression. To reduce unemployment, the act authorized funds for a large expansion of public works. Roosevelt established a new Public Works Administration (PWA) headed by Harold Ickes.

When we're unemployed, we're called lazy; when the whites are unemployed it's called a depression.
— Jesse Jackson

 

Copyright 2010 by Ernie Zelinski — All Rights Reserved