Global Economy Review: Economic Depression or Economic Recession

The severe blow to the global economic made it lose it's balance. Economy's most of the strongest pillars - the giant organizations have been afflicted to what I call "Recession Virus". Candidly speaking, there's a whole lot of confusion the web is abuzz with. The period we are on is the period of recession. Is it true? Or should we call it a period of economic depression? If we ask this to 500 different economists across the globe, I am sure we will get at least 500 different views regarding global economic recession or may be economic depression. Apparently economic recession and economic depression are almost the same, because under both situations the economic activities approach a phase of transitory cessation. My review on the economic depression and a period of recession might give you how far we are from what we were when we were happy.

A well known prang among economists states, "a recession is when your neighbor loses his job; a depression is when you lose your job." This might be a reason to depict the present situation as both an economic recession and economic depression. Have you ever heard of a time when there had a period of recession but not depression? Well, both these situation are like two demon sisters, walking hand in hand together most of the times.


Economic Depression vs Economic Recession

It reminds me of the great economic depression that had been in scene before 1930s. Economic activities had an abrupt downturn. It wasn't until this period that the term economic recession was developed to visualize a difference in economic conditions during 1930s and that during 1910 and 1913. This implies that an economic depression is an economic recession with a prolonged effect, ending up with a bigger downturn of economic activities. It's not the general brain's cup of tea to chalk out a distinction between economic depression and a recession. Best yardstick is to study the GDP. A situation when the economic downturn is due to over 10 percent decline in GDP is a depression. An economic downturn that affects less severely is a recession.


Period of Recession, as depicted by BCDC

The Business Cycle Dating Committee (BCDC) at the National Bureau of Economic Research (NBER) have come up with more lucid definition of economic recession. BCDC defines a period of recession as a time when business activities reach the highest limit and then starts declining until when business bottoms out. According to them an average recession doesn't last more than a year or so.


US Economic Recession - Fast Facts

• The United States last suffered an economic depression during a period ranging between May 1937 and June 1938. The real GDP declined by 18.2%.
• 1930s depression was Great Economic Depression that existed through out a period ranging between August 1929 and March 1933. The GDP declined by 33.0%.
• The recovery Great Economic Depression in USA was followed by an economic recession during 1937-38.
• In the last 60 years, the worst recession existed between November 1973 and March 1975. The real GDP declined by 4.9%