What happens during a recession – the good and the bad? How is it different than a depression?

4 Responses to “What happens during a recession – the good and the bad? How is it different than a depression?”

1. 

   meg February 8, 2010 at 5:05 am #

   A recession is a period of declining GDP ( production) in a country. A depression is an extended period (years even decades) of gdp significantly below potential and high unemployment. There may be some growth in GDP during a depression but the economy never reaches full employment. The recession that stared more than a year ago has ended in most countries because their GDP has stared to grow however it it is too soon to say for sure that the growth will continue long enough to restore full employment. The best guide is what has happen in the past, and since WWII the recover continued. SEE graph of the unemployment rate at. http://www.economagic.com/em-cgi/charter.exe/fedstl/unrate+1947+2009+0+1+1+290+545++0
   For comparison the unemployment rate reached 25% in 1933 and stayed above 15% until the beginning ow WWII.
2. 

   Eddy T February 8, 2010 at 5:05 am #

   A recession happens when there is negative growth in the economy.But certain sector like the food and essential might be doing well In a depression all sectors of the economy are not doing well. Recession is bad, the only good thing is people can learn new things and hope for the better. The government also need to be the catalyst for change and not to get too involved with the running of the business.Let business change themselves for the better. It government needs to bailout a bank it must only do so if the bank had bad management which may cause it to collapsed.Not if it is too big to fail.
3. 

   Redjr01 February 8, 2010 at 5:05 am #

   A recession is a decline of GDP over a certain period of time and a depression is a plunge in GDP for a long period of time coupled with high unemployment. A typical recession usually lasts about six months if handled correctly using aggressive fiscal policy and monetary policy. A depression is usually when every facet of the economy comes to a halt. Companies are laying off and not making profits, people are out of work and not spending, and the banks are not lending drying up liquidity in the markets.

   We came close to a depression. That’s why banks were bailed out and the government became the lenders to float money into the economy and to get a heartbeat. However, because of the bailout bills and the stimulus bill, we are no longer near a depression. Further,because we have had positive GDP growth the past couple of quarters some experts are saying we are out of a recession as well. However, the economy is still shedding jobs and companies are still not hiring which means we are not out of the woods yet. Because of this, no one knows what to expect. Uncertainty is still the problem. A lot of people are still underemployed, unemployed, or on the chopping block and will not have the confidence to spend until companies start hiring again. Although the unemployment rate dropped, payrolls have not picked up which means the unemployment dip is due to people exhausting their unemployment benefits and/or are temporary workers. And, although corporations are profitable again, they still aren’t expanding because of uncertainty over the Obama administrations regulations and tax policy.

   So, until there is clarity in the economy, it will be hard to tell where we are heading. We are in a much better spot but we are still on hold.
4. 

   Jeanette February 8, 2010 at 5:05 am #

   A Recession is officially two consecutive quarters of GDP shrinkage.. A Depression has no official measure but you’ll know it when if it happens. There really isn’t an economic definition for a Depression.

   The last Great Depression was in the late 20′s and early 30′s and was worldwide, unemployment was 20% and the vast majority of assets had shrunk.

   One of the best measures of a sign of Depression is when no asset class including gold is considered safe and people are stuffing their money in their mattress or under their floor.

   The definition of a recession, depression and poverty is individualistic and based on perspective, by many measures the US Economy has been in a Recession since third quarter 2007 while GDP was still positive but many Americans felt the same symptoms caused by increasing food and energy / gasoline prices.

   We are no where near Depression levels and it is unlikely since the world has learned its lesson and can avoid it, a major castrophe like an earthquake in Europe or devastating drought could plunge the planet and it was a great drought in the midwestern USA which kept the USA from economic recovery until the economic stimulus created by defense spending and manufacturing war supplies for Europe before joining WW II ourselves.