Recession or depression?

Sukumar Ranganathan — Tue, 16 Dec 2008 07:17:00 GMT

So, is the world going through a slowdown, a downturn, a recession, or depression ?
And what of India?
Truth is, it all depends on what you read.
The terms, slowdown, downturn, recession, and depression are being used frequently (alsmost as frequently as "unprecedented" which is my choice for word of the year) and, sometimes, interchangeably. So, what's what?
Here's a quick primer.
A slowdown is when growth slows. The market, or economy in question doesn't contract, but its pace of growth slows. That's what's likely to happen in India in 2008-09 after three years of 9-per cent-plus growth.
A downturn is when a market or economy starts contracting. That's already started happening in the market for automobiles here.
According to this site, a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters. Economists, however (as explained in the same website) disagree with this: They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it is called an expansionary period. By this definition, the average recession lasts about a year.
And a depression is simply a recession that lasts longer and hurts more.
There's a neat little post on what makes a depression here.
There's a clear progression to the words: slowdown, downturn, recession, depression
So, is the US economy in recession or depression?
The answer may eventually come down to how people feel.
In India, we may be in the midst of a slowdown, but it does feel like a recession is upon us.This article explains why in parts of Asia, 5% and 6% growth does feel like a recession.

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Recession or depression?