Recessions v.s Depressions and the Business Cycle

First of the meaning of recession and depression are not the same thing. A recession is a significant decline in economic activity spread across the economy lasting more than a few months. Although there no actual definitions a depression is much more sever than a depression. There have been many recessions and depressions that have happened in the United States. The goal for the U.S is to avoid any recessions or depressions that they can and keep this country going strong.

"A recession is when your neighbor loses his job, its a depression when you lose your job". That is a famous quote from president Harry S Truman that basically speaks for itself. Most Recessions are very brief and have been rare in recent decades. Since the world is not perfect there are always going to be times where the economy slows down. These slow times do not always have to be so dramatic it could be as simple as a manufacturer producing to many goods also known as a over supply. Since the mid-1850s the U.S has had 32 total recessions. The longest ones lasting an astounding 16 months.

A depression on the other hand is much more severe than a recession. A depression is when the GDP or the real gross domestic product decreases by 10%. Although recessions can take a toll on the nation, depressions have long lasting effects . Overall depressions are one of the worst things to go through in life. Unemployment rises while wages drop, over production and no demand, basically the Nation has nothing and is quickly slipping away. But somehow the U.S always find a way to push the nation towards regrowth, and eventually pulling ourselves out of such a hole.

Now we move onto the business cycle. The business cycle is the fluctuations in economic activity that an economy experiences over a period of time.  It is defined in terms of expansions and recessions. During expansions the economy is growing, such as employment and sales depending your company. In recessions the economy's is measured in decreasing in many things. To some people the business cycle may be confusing , but it is simple if you sit back and look at the true meaning of it.