Wednesday, July 11, 2012
RECESSION OR DEPRESSION?-You decide
Recession
A period of general economic decline, defined usually as a
contraction in the GDP for six months (two consecutive quarters) or
longer. Marked by high unemployment, stagnant wages, and a fall in
retail sales, a recession generally does not last longer than one
year and is much milder than a depression. Although recessions are
considered a normal part of a capitalist economy, there is no
unanimity of economists on its causes.
Depression
Lowest point in an economic cycle characterised by (1) reduced
purchasing power, (2) mass unemployment, (3) excess of supply over
demand, (4) falling prices, or prices rising slower than usual, (5)
falling wages, or wages rising slower than usual, and (6) general
lack of confidence in the future. Also called a slump, a depression
causes a drop in all economic activity. Major depressions may
continue for several years, such as the Great Depression (1930-40),
that had a worldwide impact.
Source :www.businessdictionary.com/definition
The awaited second quarter's GDP results for 2012 will
be interesting and in all likelihood economists and politicians
will be using the term 'slump', but you never
know!
The first estimates of gross domestic product for the period
between April and June will be published on July
25th