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Difference Between Recession and Depression

recessionIn economics, recession and depression both means a slowdown in economic activity. Generally recession can be taken as a far less severe form of depression.

A widely accepted indicator of recession is, decline in GDP for two successive quarters . That is if the Gross Domestic Product of an economy declines continuously for six months, the economy is in recession. Although there is no widely-agreed-upon definition for a depression, generally a depression is distinguished from recession when GDP declines by more than 10 percent. Another yardstick for depression is a recession lasting 3 or more years.

Recession occurs more frequently than depression. Deciding whether the economy is in recession or depression is a matter of perspective.

Summary
1. Recession is a less severe form of economic downturn.
2. Recession occurs more frequently than depression.
3. When the GDP declines by more than 10% and lasts longer than 3 years, its called depression.

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6 Comments

  1. Thanks for the articles.

  2. AWESOME STUFF DUDE

  3. because of the summary its easy to understand….

  4. depression is sever and long lasting process while recession is frequently happening and is for a short period.
    depression effect the whole world while recession is concerned with a specific country.

  5. I have been curious about the difference and have been searching 3 sites, then I came across yours. Your definition is much better explained. Many thanks!!

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