Question: What is the difference between a recession and a depression? I have been out of work since last November. It seems like a depression for me. I worked for a civil/structural consulting engineering firm for the past 11 1/2 years. We at one point had 30 people working there. Now 12 people have left, 9 of them are the principles. I do not foresee any work in this area for the next 6 months, at least. I want to go back to work, but there is no work for what I do. Also since I left, 3 of my co-workers have been let go. The firm may close by the end of the year because lack of work. This is a very competitive business. Other firms have closed their doors because of no work. Three years ago, we had the busiest year in the firm’s 25 years of existence.
Paul Solman: “Depression” and “recession” are loosely used terms (and you can see here for an earlier post on the differences). To the extent they have technical definitions, the D-word is a shrinkage in total yearly output of 10 percent. The R-word refers to two consecutive quarters (ie, one half-year) of any shrinkage in output.
In the vernacular, a “depression” is one hell of a downturn, with one hell of a lot of folks out of work. A “recession” is less catastrophic slide. This downturn is being called the Great Recession because of its severity. But for those like yourself without jobs, “depression” doesn’t seem especially hyperbolic.