What's the difference between a Recession and a Depression?

[gateley]

I ask because, even though I'm not savvy in economics, I have a gut feeling we're heading for a Depression. Is that possible? What will that mean to you and me?

[uberblonde]

1. Like the difference between a one-night stand and a relationship.

The depression is longer and more serious but we're still getting fucked.

[ixion]

2. I think it's a matter of scale

a recession is a pullback, where as a depression is more pronounced -- that is: longer and deeper.

[lvx35]

3. I think you're right, I've heard that as well. nt

[supernova]

9. Think similar

Recession ---> Depression is only a matter of degree.

Recession, I think, you have slower or no growth over a business cycle or two.

Depression is not just a slow down, but an actual significant contracting of several sectors over not just one but several business cycles.

I'm sure there's a more academic definition out there, but that's my working definition.

[Vincardog]

4. We are fucked. The rich will use it as another chance to pick up all the real property at 2% of cost

[shain from kane]

5. A recession is when your neighbor loses his job. A depression is when you lose your job.

There’s an old joke among economists that states:
A recession is when your neighbor loses his job.

A depression is when you lose your job.

[Jamastiene]

6. Recession doesn't last as long as a Depression.

Good way to remember it:
Recess = short break
Depress = Oh, God, when will the misery ever end.

[OffWithTheirHeads]

7. A recession is when your neighbor gets laid off

A depression is when you get laid off.

[Fresh_Start]

8. severity

Depression is more severe loss.
I don't remember if its GNP or GDP or both

[MethuenProgressive]

10. A recession hurts the other guy. A depression hurts you.

[tekisui]

11. A recession is here now. A depression will be here in about a year.

[Tuesday Afternoon]

12. soup -----> stone soup

[mnhtnbb]

13. A depression is a recession that lasts longer and hurts more. See link.

http://economics.about.com/cs/businesscycles/a/depressions_2.htm

[THUNDER HANDS]

14. definition:

In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. However, in the United States the official designation of recessions is done by the business-cycle dating committee of the National Bureau of Economic Research.<1> That Bureau defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months." 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. A devastating breakdown of an economy (essentially, a severe depression, or a hyperinflation, depending on the circumstances) is called economic collapse. Newspaper columnist Sidney J. Harris distinguished terms this way: "a recession is when you lose your job; a depression is when I lose mine."

from wikipedia

[capi888]

15. Well look out for Tomorrow...World Markets sunk today!

Our markets not open MLK holiday. So know one knows....and could really effect this election..which way I don't know.

If you have BBC turn it on!!! World Stocks Sunk on fear of American Economy. The bush administration has sold America and World out!! Our futures down 500 pts..or 5% so gather all you can and hold on!

The World Market lost 5% in value. That means tomorrow the Stock Market will dive tomorrow.

[TechBear_Seattle]

16. It depends on whethery you are blaming yourself or blaming the opposition

"We" can only create a recession, ie a temporary slow-down of the economy which is necessary to fix the problems left by "Them."

"They" can only create a depression, ie a long-term reversal of the economy caused by mismanagement, malfeasance, poor planning and incompetent polices. Can only be fixed by "We."

[Lobster Martini]

17. Difference is, there aren't any good folk songs about recessions (n/t)

[gateley]

18. Thanks, everyone - great answers.

:hi:

:scared:

[DadOf2LittleAngels]

19. Canned answers

From The Business Cycle Dating Committee at the National Bureau of Economic Research

A recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period. By this definition, the average recession lasts about a year.

FYI before the big one all recessions were called depressions the new naming difference does nothing but server as a talking point for whoever is in charge so that can say 'Its *just* a recession' so even to this day there is no definition other than to say a depression is just a long recession.

Now bear in mind this too is very deceptive because say 3% loss in GDP per year even if its stable will make things on the poor and middle class worse and worse as time goes on..

[TNDemo]

20. I just keep trying to figure out what I should be doing now.

I don't have debt except for my mortgage. Have considered refinancing it now while we would still be approved (hoping jobs hold out when it gets bad) but it doesn't seem to save us that much so dropped that idea. Stock up on dried beans?? Hard to know but would be interested in others' ideas.

I remember my father's family all worked for the railroad (from its invention until my generation when it kinda went the way of the dinosaur - used to be a great place to be a lifelong employee). During the depression (and my father was born in May 1932, the worst month of all, the 6th child - needed that like a hole in the head) my grandfather was laid off for five years. Every day he would hit the streets and try to find employment for the day and do whatever he could. The family joke was that some days they would have beans and potatoes and other days they would have potatoes and beans. Guess I should be stocking up on those!

[gateley]

24. I agree -- there's not much I CAN do that I'm not doing already, but that may

not be enough. If my salary is $100, and my monthly expenses are $170...

Some people may not be able to afford the beans and potatoes. Or if they do, afford the electricity/gas to cook them. Or the wood for the fire.

I really hope I'm being an alarmist, I really do.

[radfringe]

21. here ya go

Recession? Depression? What's the difference?

Recession: The Newspaper Definition
The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.
This definition is unpopular with most economists for two main reasons.

First, this definition does not take into consideration changes in other variables. For example this definition ignores any changes in the unemployment rate or consumer confidence. Second, by using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.

Recession: The BCDC Definition
The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period. By this definition, the average recession lasts about a year.


Depression
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 differentiate 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 activity.

The Difference
So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.
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.

If we use this method then the Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. The United States hasn’t had anything even 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 fell by 4.9 percent. Countries such as Finland and Indonesia have suffered depressions in recent memory using this definition.
Now you should be able to determine the difference between a recession and a depression without resorting to the poor humor of the dismal scientists.

[screembloodymurder]

22. Yesterday we were in a recession.

Tomorrow we'll be in a depression.

[951-Riverside]

23. When you're armed and fighting different warlord/gang factions....

Its a depression.

When you're at home grumbling about the economy...

Its a recession.