What is the Difference Between Depression and Recession?
🆚 Go to Comparative Table 🆚The main difference between a depression and a recession lies in their severity, duration, and scale. Here are the key differences:
- Severity: A recession is a decline in economic activity spread across the economy that lasts more than a few months, while a depression is a more extreme and long-lasting economic downturn, characterized by widespread unemployment and major pauses in economic activity.
- Duration: Recessions typically last from six months to a year, while depressions are much longer-lasting. For example, the Great Depression lasted from 1929 to 1939.
- Scale: Recessions can be more localized, limited to a single country, while depressions can occur across many nations and have a global reach.
In summary, a recession is a period of decline in total output, income, employment, and trade, while a depression is a more severe and prolonged economic downturn with widespread unemployment and significant pauses in economic activity. Recessions are more common and localized, whereas depressions are rare, far-reaching, and long-lasting.
Comparative Table: Depression vs Recession
Here is a table comparing the differences between a recession and a depression:
| Recession | Depression |
|---|---|
| A period of decline in total output, income, employment, and trade, usually lasting 6 months to a year | A prolonged period of economic recession marked by a significant decline in income and employment |
| Less severe and more common than depressions | More severe and less common than recessions, with only one depression occurring in the last century |
| Widespread contractions in many sectors of the economy | Extreme decline affecting large portions of the economy, potentially leading to economic activity feeling like it's coming to a halt |
| Recessions are short-term economic slowdowns | Depressions are much rarer and have more long-lasting effects |
In summary, while both recessions and depressions represent economic downturns, depressions are much more severe and long-lasting than recessions. A recession is a short-term economic slowdown, whereas a depression is a prolonged period of economic decline with severe consequences.
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