What is the difference between Recession and Depression

Economists do remember an old joke that says: A recession is when your neighbor loses his job. And a depression is when you lose your job. What is the difference between the two terms: recession and depression? The distinction between them is not understood very well because there is no clear definition of both the terms and there is no universal agreement upon the scientists. Make a simple research: ask one hundred various economists to make a distinction between the terms depression and recession, you would get at least one hundred different answers. In our article we will try to recapitulate the terms and expound how they differentiate in such a way that almost all scientists would agree with.

First of all we will tell you about the newspaper definition of recession. Its standard newspaper definition sounds like that “a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.” However, this definition is not approved by the majority of economists that can be explained by means of two major reasons. First of all, the newspaper formualtion does not take into account other economic changes such as alterations in the consumer confidence or in unemployment rate. Secondly, if to use quarterly data defining the recession, the newspaper definition of recession makes it difficult to emphasize the beginning and the end of a recession. As a result this approach will not detect the recession with the duration of ten months or even less.

Then we will turn to the Business Cycle Dating Committee (BCDC) Definition of the recession. The BCDC at the National Bureau of Economic Research (NBER) firstly defines the quantity of business activity in the economy with the help of such aspects as industrial production, employment, wholesale-retail sales as well as real income. The committee gives the following definition of the recession: “the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out.” When the business activity begins to go up again it is defined as an expansionary period. According to this definition, the duration of an average recession is about a year. It is also difficult to define the depression. Before the Great Depression started in 1930s, any softening of economy in any economic activity was called a depression. The notion recession was made up to evolved in this period in order to distinguish such periods as the 1930s from smaller economic slacks that happened in 1910 and 1913. It tends to give not difficult definition of a depression as a recession that continues longer and has a larger diminution in business activity. So what is the distinction between the recession and the depression?

We can determine it only in a practical way looking at the alterations in the Gross Domestic Product. Usually a depression is any economic slowdown where real GDP falls by more than 10 percent. A recession is not so severe; an economic downturn in it is less. By this criterion, the last depression in the USA was during the period of May 1937 to June 1938, where real GDP declined up to 18.2 percent. If to use this method then the Great Depression of the 1930s can be defined as two individual incidents: an extremely rigid depression that occurred from August 1929 to March 1933 where real GDP dropped by almost 33 percent then was a period of recovery an later another less ascetic depression of 1937-38 happened. But one should note that the USA did not have a depression in the post-bellum period. But the worst recession for the last 60 years was from November 1973 to March 1975, when real GDP dropped by 4.9 percent.

Recovering from Job Loss During Recession

Do you remember Forrest Gump’s words? “…it happens”. Many unpleasant situations do happen in our everyday life. What do psychologists advise if you wake up unemployed and don’t know what will happen tomorrow?

No panic. The most frightening thing for our psychic is the obscurity of our nearest future. The worst thing that you can do is to start panicking and thinking about negative scenarios of your future and coloring it all black. See where the light comes from.

Try to calm down and think that you won’t die of hunger. Don’t you believe that? Think harder. Remember that this is not the first time in your life that you have remained without a penny in your pocket. And there was always some solution, even if from the first glance it could seem that there weren’t any. Think harder. Look around. Do you see any famished people? On the contrary, everywhere around you can see companies advertising their weight-loss products.

Try to understand that the fear is only a product of your imagination. Face it and realize that it is not an integral part of your personality. Make it out and it will dissolve like morning fog.

Remember about the numerous advantages of your present position. You have a place where to live, you have your close ones and hope for the future, your specialization that sooner or later will bring you some profit, you have something in your pocket for a rainy day … After all, if you are reading these lines, you have Internet access! And it is not such a small thing.

Systematize your steps. Write them down. Never write vague phrases like “tomorrow I will start a new life”, but something of the kind “at 4 p.m. I make up my curriculum as I may need it tomorrow”, “at 5 p.m. I buy a newspaper and underline all interesting vacancies” etc. Try not to postpone anything from you plan. Being active sooner or later will bring you to success.

Try to be flexible. Usually a job loss is especially traumatic for clerks who are used to steady job hours and were connected to one working place. Loosing their working place can turn into both a professional and personal tragedy. But working as freelancer or having some temporal job can have its advantages also. Why not take them into consideration or try to undertake something new?

Try to catch any chance. Don’t lose time for reflections. Just challenge. If it does not work and you fail, face too many difficulties – it is not your destiny, not your way. But if you don’t even try to, if you are afraid or doubt – you can’t blame the situation, the world or whatever – you can blame only yourself for the lost chance. Maybe, it was a great chance and you missed it.

So challenge and don’t pretend to be a martyr. We all can endure as many difficulties as life brings. And sometimes something even more.

How to Survive The Time Recession

In our modern world we are to understand that we are taking another decisive step to the so-called notion of recession. This slow down in the economy does not seem to be unexpected as such downturns are the result of the processes that take place in the world economy from time to time. Some scientists declare that the changes occur every 15 years. These recessions and expansion periods are the regular habit of the economic development.

Anyway, when recession happens we have to find the ways of achieving better results in spite of any conditions. The main and the most important goal is to cover the losses and moreover to gain better results. These excellent results are possible only if people are willing to work and survive recession. Still they have to keep in mind that the unemployment picture is quite unpleasant and sometimes horrible.

During the time of recession people are trying to be selective and to differentiate whether the things they are likely to buy will be really necessary at this very moment. In other words, people of different countries are willing to be aware of any possible changes and want to spend less money on everything. For this reason, there are many people who make money and look for advantageous bargains at the same time. Due to this reason restaurants, cafes, pizzerias suffer a lot. It could be easily explained by the desire to save money and not to spend it on entertainment. Obviously, recession does not inspire people to look for lounge songs or expensive food. On the other hand, if you are planning to open a new restaurant, you have to wait a little and weight all the pros and cons in order not to experience losses.

But still keep in minds the thoughts of your competitors and clarify for yourself the following.

Being business owners or entrepreneurs they are definitely aware of the existing possibilities and the real situation. They will naturally think the way you are. In other words, they will definitely postpone the idea of starting a new business till the right time. So if you are brave enough you may take a risk and become the first in the line. Nobody knows, what will turn out of this but you are to try and maybe this is your lucky chance.

One more point to be considered is the feature this recession offers. We are talking about the Internet as the distinguishing feature of our modern downturn. Due to the Internet you have a great opportunity of winning the race and adding a few more points to your list. The main advantage is that you are able to advertise your product and to be aware of the information regarding the whole economic situation. Moreover, the usage of the Internet does not require any additional skills. What is important, in this case your time will be paid off if spend in the right and sensible way.