March 29, 2004
John from Los Altos…
Do you think that sales of American treasury holdings by Asian countries will influence the US economy?
John, you've earned yourself a permanent spot in the Letters to the Editor...
Why is it that I keep hearing that things are going so badly? Can you define recession and depression for me? I do apologize, but I have been so bombarded by the media that I am not really certain any more.
Here are your definitions, plus a few more graphical representations to help it stick:
Recession A period of general economic decline, specifically, a decline in GDP for two or more consecutive quarters.
Depression A period during which business activity drops significantly. High unemployment rates and deflation often accompany a depression.
recession is formally defined in macroeconomics as a fall of a country's
GDP (Gross Domestic Product) in two successive quarters. Combined with
inflation this process is known as stagflation.
A sustained recession is known as an economic depression.
(Opinions expressed on this web page are those of a faculty member or employee and do not necessarily reflect the position of University of Detroit Mercy)