31 Jan Recession? Depression? Can We Call The Whole Thing Off?
A recession is loosely defined as a period of two or more financial quarters where the Gross Domestic Product declines. It is truly difficult to measure; difficult to determine when a recession starts, and difficult to determine when it ends. Until 1929, all recessions were generally known as depressions. By contrast, depressions are now measured by the Great Depression starting in 1929 when unemployment reached 25% and wages fell by as much as 42%.
Some define a depression is a sustained recessionary period in which the population is forced to dispose of tangible assets to fund every day living. So, … sell anything on eBay lately? Check it out, people are shedding their possessions by the boatloads to raise cash to pay bills.
Other definitions of economic depression consider employment. This week, more than 100,000 people lost their job. That’s one week. In December 2008, more than 500,000 people lost their jobs. The official number of unemployed for 2008 is 2.5 million, but the unofficial count is 11 million people out of work. There is no doubt the slowdown is global, Great Britain is officially in recession, and even China posted a negative growth in their economy. Microsoft is laying off 10,000 workers and hopes to redeploy only 3,000 of those people over the next 3 years.
Our own government only just recently acknowledged that the economy is in recession. How long will it be before it admits that we are in a depression?