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What actually defines a depression? Since we've only had one, what do we consider something between 1930 and now?
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I'm assuming you mean an economic depression, and the U.S. has actually had several. Definitions differ, based on who's defiing and whether the time period described is current or past.
Duration of the downturn is one key indicator. The other is probably severity: where a recession is often defined as when 2 or more consecutive quarters of "negative growth" in the gross domestic product (GDP), a depression would be longer in duration for this indicator and a sharper drop. Unemployment is high, credit is tight, trade is reduced, there can be volatility in commodities and currencies. If GDP is reduced by 10% or more, or a recession lasts more than three years, it's "officially" a depression per Internet sources, although the population will have decided it is well before that!
Besides the famous 1929 depression, there were two big ones in 1837 and 1893. Periods of sharp downturns that did not last as long are characterized as "Panics".
Duration of the downturn is one key indicator. The other is probably severity: where a recession is often defined as when 2 or more consecutive quarters of "negative growth" in the gross domestic product (GDP), a depression would be longer in duration for this indicator and a sharper drop. Unemployment is high, credit is tight, trade is reduced, there can be volatility in commodities and currencies. If GDP is reduced by 10% or more, or a recession lasts more than three years, it's "officially" a depression per Internet sources, although the population will have decided it is well before that!
Besides the famous 1929 depression, there were two big ones in 1837 and 1893. Periods of sharp downturns that did not last as long are characterized as "Panics".
The technical definition of a Recession is quite simple, “Negative growth of the Gross Domestic Product of a country for a period of 2 quarters (6 months)”. While not everyone agrees with this definition (for very good reasons) it is a generally acceptable baseline. A "Depression" is simple an extended Recession that enters a second full year.
"In a recession your neighbor down the street loses his job. In a depression you lose your job."
I think that the expression depression is kind of based on where you live and how you're doing. If you are hit hard during bad economic times you're more likely to believe its a depression, but if you aren't then you won't.
I think that the expression depression is kind of based on where you live and how you're doing. If you are hit hard during bad economic times you're more likely to believe its a depression, but if you aren't then you won't.
Listen to the 'This American Life' Bad Bank episode. When total indebtedness >= gross domestic product.
source(s):
This American Life
This American Life
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