Recession vs. depression

A question asked privately:

What is the difference between recession and depression?

Depression is an unusually severe or unusually long recession.  Since 1854, an average recession lasted 17 months with a standard deviation of 12.  The Great Depression of 1929-33, in contrast, lasted 43 months (so it was a two standard deviation event); the Great Depression of 1873-79, 65 months (that one was a four standard deviation event).

Source:

Business Cycle Expansions and Contractions:
http://www.nber.org/cycles/cyclesmain.html

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2 Responses to Recession vs. depression

  1. Richard Savary says:

    The answer to this question is incomplete. You say a depression is an unusually severe or long recession, and then briefly describe the length related factors only. The commonest definitions regarding severity are that a recession is 2 consecutive quarters (or more) of decline in the GDP, a depression is a decline in GDP of 10% or more.

  2. NC says:

    Wow… People actually read this and care to post replies? I am not sure if I should be flattered or flabbergasted… 🙂

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