Throughout this essay I will be discussing the differences of ‘Recessions’ and ‘Depressions’. I will also look at any similarities and/or differences in the factors that led up to ‘The Great Depression’ in the 1930s and ‘The Great Recession’ more recently in 2007 – 2010. The last subject I will cover is ‘Secular Stagnation’. I will define and discuss whether the western economies have entered into ‘Secular Stagnation’ if I believe they have I will then also look into ways the crisis could be resolved.
The business cycle refers to fluctuations in a country/countries economic output. It is characterised by well-known phases of the business cycle like recession, depression, recover and expansion. A peak in the business cycle is usually seen after …show more content…
A good example of a recession is the most recent recession, known as The Great Depression in 2008 – 2009. During this depression there were four consecutive quarter of negative GDP growth that started in the last two quarters of 2008 and ended in the last two quarters of 2009. The recession wasn’t as sudden as the Great Depression because if started with a small contraction of 0.7% where it then rebounded to 0.6% in the second quarter of the year. Another sign that the recession had start was the fact that in January of 2008 the economy had lost over 16000 jobs. The unusual part about this recession compared to others was, the demand for housing was the first to decline. This is why most experts though it was just the end of the housing bubble and not the start of a new recession (Amadeo, What Is a Recession? Examples, Impact, Benefits, 2016)
The Economic Times defines a ‘Depression’ as a severe and prolonged recession (The Economic Times, 2016). Generally, when an economy continues to suffer a recession for two or more quarters it is considered a depression. Both the GDP and GNP show a negative growth as well as more businesses failing and a significant increase in unemployment (The Economic Times, …show more content…
Many economists believe there hasn’t been a large enough decline that warrants the ‘depression’ title since the Great Depression of the 1930’s. However, the numbers seen in the 2007 recession which was given the name the ‘Great Recession’ because of how high unemployment was for over 2 years. The US Bureau of Labour Statistics said; “the seasonally adjusted employment that started at 5% in December 2009 increased to 10% by the end of 2009. Even though this is considered a bad recession, it was nowhere near the unemployment rates of the ‘Great Depression in the 1930’s where unemployment was 25%.” However, when you compare the household wealth, the stock markets and house prices, the ‘Great Recession’ was just as bad or in some cases even worse than the ‘Great Depression’. For example, from December 2007 until March 2009, the stock market declined more than 50% and during this time it actually declined at a faster pace than the ‘Great Depression’. The average household income fell almost 40% during the Great Recession, this decline was 5 times larger than the decline that occurred during the ‘Great
The business cycle refers to fluctuations in a country/countries economic output. It is characterised by well-known phases of the business cycle like recession, depression, recover and expansion. A peak in the business cycle is usually seen after …show more content…
A good example of a recession is the most recent recession, known as The Great Depression in 2008 – 2009. During this depression there were four consecutive quarter of negative GDP growth that started in the last two quarters of 2008 and ended in the last two quarters of 2009. The recession wasn’t as sudden as the Great Depression because if started with a small contraction of 0.7% where it then rebounded to 0.6% in the second quarter of the year. Another sign that the recession had start was the fact that in January of 2008 the economy had lost over 16000 jobs. The unusual part about this recession compared to others was, the demand for housing was the first to decline. This is why most experts though it was just the end of the housing bubble and not the start of a new recession (Amadeo, What Is a Recession? Examples, Impact, Benefits, 2016)
The Economic Times defines a ‘Depression’ as a severe and prolonged recession (The Economic Times, 2016). Generally, when an economy continues to suffer a recession for two or more quarters it is considered a depression. Both the GDP and GNP show a negative growth as well as more businesses failing and a significant increase in unemployment (The Economic Times, …show more content…
Many economists believe there hasn’t been a large enough decline that warrants the ‘depression’ title since the Great Depression of the 1930’s. However, the numbers seen in the 2007 recession which was given the name the ‘Great Recession’ because of how high unemployment was for over 2 years. The US Bureau of Labour Statistics said; “the seasonally adjusted employment that started at 5% in December 2009 increased to 10% by the end of 2009. Even though this is considered a bad recession, it was nowhere near the unemployment rates of the ‘Great Depression in the 1930’s where unemployment was 25%.” However, when you compare the household wealth, the stock markets and house prices, the ‘Great Recession’ was just as bad or in some cases even worse than the ‘Great Depression’. For example, from December 2007 until March 2009, the stock market declined more than 50% and during this time it actually declined at a faster pace than the ‘Great Depression’. The average household income fell almost 40% during the Great Recession, this decline was 5 times larger than the decline that occurred during the ‘Great