What Is The Difference Between Recession And Depression & Does It Really Matter?

Don’t make the mistake of thinking that you have to agree with people and their beliefs to defend them from injustice.
~ Bryant H. McGill

Let’s explore the difference between a recession and a depression. Folks are asking this question lately because we’re currently in hard times the likes of which haven’t been seen since the 30’s depression or so we’ve been told.

The interesting thing if you took a look at that article link I posted above is that this recession was supposed to have ended a few years ago already. Doesn’t look like the economists got it right did they?

But they’re calling it a recession. Is it a recession? And if so, what is different between a depression and a recession?

Well, economists don’t necessarily agree on what the differences are between depressions and recessions, but the best definition I found was this. A depression is when the GDP falls more than 10% over a sustained period of time, usually a year or more. A recession is when GDP declines but is less than 10% over a similar period of time.

With these numbers in mind, it would seem that we are in a recession and not a depression as the GDP fell just -0.3% in 2008 and -3.5% in 2009.

Apparently, according to the BEA (Bureau of Economic Analysis) GDP grew both in 2010 (3%) and 2011 (final numbers not out yet) however, I am very circumspect of those kids of numbers as I believe that the BEA as well as other groups continue to massage the numbers to keep us optimistic.

If you search around the net for information about GDP and the reliability of those numbers as well and especially of the employment numbers you see that economics turns into more magic than math.

As such, I don’t put much weight in them myself. A prefer to think of the perhaps colloquial or comical way of determining whether we are in a recession or depression. Here it goes. You might have heard it before as a joke, but I think there is some sincerity and truthfulness behind the smile.

A recession is when your neighbour loses his job. A depression is when both you and your neighbour lose your jobs.

At the end of the day, does it really matter whether we are in a recession or depression? I don’t think it does.

Our society is full of such inequality that it has become a mute point. Think of Occupy Wall Street. Mother Jones has a great graphic that gives terrific visual representation to this inequality. Basically, the top 10% of wealthiest Americans control 66% of our wealth.

With the real unemployment rate over 10%, this is not the kind of society that is egalitarian and just in my opinion. So recessions or depressions are mute. While so many of us can’t find work or work that pays even a modest income and with so many of us especially 1 in every 2 members of Congress being millionaires, you know they don’t have your interest at heart.

We need to educate ourselves and start asking questions about why there is so much injustice and inequality in our world. A good place to start is examining the myth of the liberal media. Just start thinking about that. When most media is owned by a few large corporations think about who’s interests would they be more aligned with.

Start with reading Noam Chomsky and checking out Z Communications. Both are left leaning, but with so much right leaning pablum forced down your throat by the TV and other media outlets lately, it’s time to seek out alternatives perspectives. And just start thinking about it. Use your own critical thinking and power of observation. Disengage from the propaganda and start thinking for yourself.