Some of you who read my blog regularly might not be too surprised by the title of today's entry. But I've tricked you! It's not what you think!
It's another Dear Sable Crow!!
I was asked a question by an esteemed Reader, and I love questions.
Dear Sable Crow,
What is the difference between a recession and a depression?
Depressed But Well-Dressed
To quote a quip I heard some months ago:
A recession is when someone else loses their job.
A depression is when it happens to you.
Depression is defined by the “Dictionary of Finance and Investment Terms” as: "economic condition characterized by falling prices, reduced purchasing power, an excess of supply over demand, rising unemployment, accumulating inventories, deflation, plant contraction, public fear and caution, and a general decrease in business activity."
The classic definition of recession is much more narrow and is “defined by many economists as at least two consecutive quarters of decline in a country’s GDP.”
This period we’re in, of course, is much more depression-like. But economists, politicians, and financial folks don’t like to use the word because it’s ALWAYS associated with the Great Depression. Unemployemnt at that time peaked in the low 20%s. Ours is probably around 7.5%, higher in CA. We also don't have deflation, mostly becuase our good government has pumped (by some estimates) about $3,000,000,000,000 into the economy in the last few months. A hugely inflationary attempt to hold up the value of goods, services, and those green and black slips of paper you carry around to buy things.
Yes, we get to pay that back. That's about $10,000 for every man, woman, and child in the United States. F. It also exceeds the amount of tax revenue we collect in a given year, which is approximately $2,500,000,000,000. Double F. Looks a lot worse when you put all those zeroes, doesn't it? That's trillions, folks. Double F Minus.
If you weren't depressed before, you probably are now. With good reason.