After reading today that the unemployment rate had grown to a 14 year high of 6.5 percent the words “Recession” and “Depression” came to mind. I had a friend tell me recently that his definition of recession and depression was this:

“If you’re losing money consistently on your investments, we are in a recession. If you lose your job, we are in a depression.”

It seems that with the huge surge of foreclosures and the real estate slump, any job in and around construction and home improvement would be in jeopardy already. Throw in a slumping economy where people just don’t buy as much as they used to, and it doesn’t take a genius to figure out that many jobs will be lost.

So to read that the unemployment rate is on the rise caught my attention. Are we heading for a depression? And, if so, are we currently in a recession? This caused me to do a little research to find out if we are in fact in a recession. I read on so many articles that say we are “heading for a recession”. But honestly, it feels like we are already in a recession. So, are we in a recession?

After some research, I found that there are actually multiple definitions for “recession”, with many of the definitions having very general guidelines.

A period of general economic decline, part of the usual business cycle. – afr.com/home/investment_guides/glossary.aspx

A significant decline in general economic activity extending over a period of time. – www.argmax.com/About/articles.php

There are also more specific definitions:

technically defined as at least two consecutive quarters when the economy shrinks or fails to grow. – www.tdwaterhouse.ca/pcs/pic/glossary.jsp

A decline in business activity. Often defined as two consecutive quarters with a real fall in gross national production. – www.sterlingexchange.co.uk/fxglossary.htm

Two consecutive quarters of declining GDP. – strategis.ic.gc.ca/epic/site/sme_fdi-prf_pme.nsf/en/01068e.html

So it looks like an overall definition would say that a recession would be defined as 2 consecutive quarters of declining Gross Domestic Product.

According to this graph at the Bureau of Economic Analysis (snapshot below), we have not yet had 2 consecutive declining GDP. So, according to the technical definition are not yet officially in a recession. Interesting.

Maybe the US Economy is not that bad. Maybe the news and media simply blow things out of proportion for news’ sake and the reality is that the economy is not that bad. Well, I believe that the answer lies with your neighbors, friends and family. That’s where you’ll find the real strength (or weakness) of the US Economy, and maybe that’s where you’ll find the real definition of a recession, or worse yet, a depression.

Share This Article:

Related posts:

1. U.S. Officially In Recession Says National Bureau of Economic Research
2. European Union Officially In Recession, Is The U.S. Next?
3. 5 Tips On How To Bulletproof Your Job

Tags: depression, gdp, neighbor, recession