On Recessions and Depressions

By Staff Editor | July 21, 2024

What is the difference between a depression and a recession, and which are we experiencing now? Until the Great Depression, and for some time after, any downturn in economic activity was known as a depression. But in the late 20th century, economists and politicians were reluctant to alarm the public by using that loaded term, and so they coined the alternative, “recession” to denote a relatively minor economic downturn. Some have attempted to give formal definitions, based on the extent of shrinkage or the duration of the negative period. But the best definition remains the somewhat humorous one: “A recession is when other people lose their jobs. A depression is when you lose yours.” To this we may add, for the current recession: “A recession is when other people lose their homes, a recession is when you lose yours.”

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