It’s Good To Know: Economic Depression

Recession here, recession there, we already know now that a recession defines the reduction of a country’s gross domestic product (GDP) for at least two quarters.

But how about a depression? There are now talks of a possible return to 1929’s depression. But what is it exactly, or how is it defined by economists? You’ve got as many flavours as you like, there is no widely accepted definition, but according to The Economist there are tow rules of thumb:

1. A decline in real GDP exceeding 10%
2. Recession lasting 3 or more years

So that’s what it seems to be. Since we must be in the third quarter of this recession/depression, we might/might not be at least in the first third of an economic depression.

Jeez, I’d rather stick to the old fashioned definition: A recession is when your neighbour loses his job. A depression when you do.

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