It would be wonderful if we could always experience economic growth, but not all good things can last forever. We have experienced plenty of economic highs in modern US history, but also lows, like the 1930s Great Depression and, more recently, the 2008 Great Recession. Both of those caused economic turmoil, but let’s look at recession vs. depression – what’s the difference?
An economic recession is a period of temporary economic decline, generally defined by a fall in GDP in two consecutive quarters.
During a recession, trade and industrial activity slows down. This can be extremely tough on companies, especially when the economic downturn catches business leaders off guard and unprepared.
[ Further Reading: Five Positive Benefits of a Recession ]
An economic depression is essentially more severe than an average recession, with a steeper decline in GDP. While recessions can last longer than a year, a depression can go on for several years.
During an economic depression, there is a much sharper decline in growth, industrial production, construction, trade, and so much more. In such times, many people will also face unemployment.
The prospect of a depression causes many to worry, but with proper planning, there is a lot you can do to help prepare yourself or your business for such an event, like the upcoming 2030s Great Depression.
Both a recession and a depression can have a sizable negative impact on your business, so it is best to have plans in place to help your company withstand such economic occurrences. By consulting our economic forecasts and implementing our Management Objectives™, you can start effectively planning for the future. You will know exactly what could impact your business or your industry.