Is the Current Economic Downturn/Recession Going To Turn Into a Depression?
The economy has slowed considerably this year. This is a fact…whatever label you want to put on it. The only question now is how bad it’s going to get. While one may be tempted to say that this downturn is going to be mild, I think one needs to be cautious about such a prediction.
First and foremost, nobody knows what will happen; the best we can do is look at historical data. One of the issues, however, is what one means by the term ‘depression.’ This is important because we need to be on the same page. The reality of the situation is that I see the term “depression” thrown around a lot, but I’ve never seen a single person tell us what they mean by the term (I’m not asking people to be Bertrand Russell, but we all need to be more precise and clear — me included).
So, what are some possible definitions of an (economic) depression? Well, let’s look at some proposals that I thought of.
An economic depression is when:
A. The unemployment rate is very high
B. The economy stops growing for a long time
C. There’s a severe recession coupled with an economy that is stagnant for years
D. There’s a situation where an economy doesn’t grow for decades (e.g. Japan)
