Often you may hear discussion among colleagues and co-workers that the economy is in a recession, though other times you may hear it being called a depression. The economic downturn, as referred to in either of the definitions, is a bit grim these days. They are simply different terms that are used to define an economic state. The differences between the two can be understood by learning a few facts. The Gross Domestic Product (GDP) is considered over two quarters consecutively in the definitions.
The decline or increase of GDP is used to measure and classify depression or recession stages. If there had been a decline over 10%, it is thought of as a depression, less than that percentage and it is called a recession. Many small businesses have to struggle during either of the times, no matter which definition is used. Large businesses can usually stay afloat unless it was a depression situation where only the strongest will survive.
Other factors are taken into consideration when weighing the state of the economy. Employment rates, money spending, actual income and possibly less spending by the families in America can also be used to distinguish between a recession and a depression. The worst of our economic situations occurred in the 30’s with the era that was deemed the Great Depression. It was by far, the worst slump that America has been in to date. We can consider ourselves lucky that the economy seems to be heading upwards now and the threat of a depression has now dwindled slightly.