One thought on “Recessions vs. Depressions

  1. shinichi Post author

    ‘Recessions’ vs. ‘Depressions’ in the Economy


    A recession is a downtrend in the economy that can affect production and employment, and produce lower household income and spending. The effects of a depression are much more severe, characterized by widespread unemployment and major pauses in economic activity. Recessions can also be more localized, while depressions can have global reach.


    A recession is a downward trend in the business cycle, one that is characterized by a decline in production and employment. This trend lowers household income and spending, which consequently causes many businesses and households to delay making large investments or purchases.

    A depression is a major downswing (far more severe than a downward trend) in the business cycle; one which is characterized by sharply reduced industrial production, widespread unemployment, a serious decline or cessation of growth in construction, and great reductions in international trade and capital movements. Another difference between a recession and a depression, in addition to the severity and effects of each, is that recessions may be limited geographically (limited to a single country), whereas depressions (such as the Great Depression of the 1930s) can occur across many nations.

    Now that the differences between a recession and a depression have been worked out we can all go back to our normal way of addressing this subject: making bad jokes and attributing them to people who probably never said them.


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