While discussing depression and regression in class, I found an article about the differences of the two. Lately it seems that too many people are falsely thinking that our country is in a depression. According to USA Today, 33% of 1,011 adults surveyed said that our economy already is in a depression.
A regression is defined as a decline in GDP for two or more consecutive quarters, and a depression is said to be "any economic downturn where real GDP declines by more than 10 percent [for a longer period of time than for a regression]." Starting in 1929, during the Great Depression, there was almost a 33% decline in the country's GDP. And while that was clearly a very perilous time for the country, the word recession was made to show the differences from the Great Depression to now, for example.
With the definitions of these words so clear cut, how can a person still believe that we are in a depression. Yes it's true that our economy is in a time of perril, and maybe even in a regression, but we do not fit into the
catagory of a depression. When comparing our country's current economic situation to the Great Depression, it is easy to see similarities, but more importantly it is easy to see obvious differences. In the Great Depression, from 1929-1942, as shown on the chart to the right, the unemployment rate went from about 4% to nearly 25% in a matter of a couple of years. The most current unemployment rate, in september 2008, was about 6.1%, and as the graph (small, right) shows, has been increasing for a number of years now. 
Comparitivelty, it is obvious which time period has the most dramatic results, although the ideas are similar.
catagory of a depression. When comparing our country's current economic situation to the Great Depression, it is easy to see similarities, but more importantly it is easy to see obvious differences. In the Great Depression, from 1929-1942, as shown on the chart to the right, the unemployment rate went from about 4% to nearly 25% in a matter of a couple of years. The most current unemployment rate, in september 2008, was about 6.1%, and as the graph (small, right) shows, has been increasing for a number of years now. 
Comparitivelty, it is obvious which time period has the most dramatic results, although the ideas are similar.In order to decide whether or not we are currently in a depression, we must ask ourselves a couple questions. Although there are similarities between us and the Great Depression, is it to the same extent? And do we better fit into a regression because of the time frame and percentages? As a country, we must admit we are in a perilous economic time, but is it really a depression?
2 comments:
I'm glad you wrote about this because earlier this week I was thinking the same thing. How could we already be categorizing ourselves as in a depression? There are clear differences between the current financial crisis and the Great Depression.
Totally. I think it completely rash to label this period of struggle as a Depression. A Depression? There are no investment bankers standing in line for food. And I don't think that people are showing much decline in their cultured need to consume. Slowed growth and cynical Wall Street insiders are not going to bring this country down.
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