Depression vs Recession: What is a Recession?
Depression vs Recession: Are you prepared? As we see the economy take a hit due to the COVID-19 Pandemic, many of us are wondering if there will be a recession or a depression. When it comes to being prepared, we not only need to prepare for the food and water we’d need to have stored, but we need to be able to see trends to know what is coming. Here’s what you need to know!
The last recession we experienced in the United States was from December 2007 until June 2009.
A recession is a major decline in economic activity. It can last for months or even years as it did recently. Experts will declare a recession when our economy experiences negative gross domestic product, an increase in unemployment, failing retail sales, and contracting measures of income and manufacturing.
Recessions are considered unavoidable. Basically it happens from time to time. The National Bureau of Economic Research has authority in defining the starting and ending dates of a recession in the United States.
There are several things that can cause a recession. When we know what can trigger one, we can know to start preparing before anyone feels the ripple effects. Here are some things to watch out for when making your preparations:
Basically, if we don’t have most economic factors in balance and in moderation, a recession can and will happen. The reason recessions are typically unavoidable is because we always have ups and downs. Nothing in an economy stays balanced forever.
Since jobs can come and go, prices can go up and down, and life can change on a whim, it is always important to have enough food, water, and cash to get through a few months of a recession.
The last time anyone experienced a depression in this Century was when we had the Great Depression.
A depression is a severe and prolonged downturn in the economy. It is typically defined as an extreme recession that lasts 3 or more years. A depression is less common than a recession. It tends to be accompanied by high unemployment and low inflation (low interest rates, are we seeing them?).
During a depression, you will see:
We need to look out for trends that may cause a depression. Could we be slipping into one or are we just heading for a recession? The same things that cause a recession can also cause a depression. That is what makes it hard to know if current trends will cause the economy to drift into a recession or a depression.
What you need to look for when it comes to an economic depression it’s how severe things are drifting downward. How severe is the economic shock? How severe is the debt? If you are seeing a rapid decline in everything and it is more severe than in 2007, we may be heading for a depression and not a recession.
Depressions and recessions are caused by similar situations. However, the overall impact of a depression is far greater than a recession. With a depression, you will have greater job losses, even higher unemployment, steeper declines in GDP. Additionally, a depression will last longer than a recession. This means the depression could be years not months!
The expert economists don’t really have a set definition or fixed measurement that shows the exact difference between the two. However, all the impacts of depression are thought to be deeper and last longer.
According to CNBC on June 9, 2020, we are officially in a recession. But, are we headed for depression? Unemployment levels are at unseen levels since the Great Depression, and many are wondering if we are going to dip right into a depression.
Even though this doesn’t look good, the economy could bounce back. This is because unemployment has been inflicted due to shutdowns from COVID. We are only looking at one factor which is unemployment. With the Great Depression, there were a number of factors including:
Today, the government has a lot of policy tools at its disposal to keep the economy from reaching a full depression.
With that being said, keep an eye on the unemployment rates. If we see the number unemployed decreasing by December, we should be out of the woods, but if it increases, we may not.
Like I always say, it is better to prepare for the worst and hope for the best. In this case, I would suggest preparing for a depression and hoping for a recession. I have written a number of posts on depressions and how to prepare for them. To get a better idea of how to prepare, read some of my other posts, below:
An economic depression is much more severe than a recession. We have been through several recessions and survived just fine. Keep prepping! Stock up on food and water! I would suggest having at least a 6-month supply! If you can’t get that much right now, starting somewhere is better than nothing. Start with a can a week or each time you visit the store and work your way up. Work up to 2-weeks, then 3-weeks, a month, and just keep going. Remember, prepare for the worst and hope for the best! Please keep prepping, we must. May God bless this world, Linda
Copyright Images: Economic Collapse Deposit photos_2893414_s-2019
Shop sales folks! Use those reward programs. I have gotten some extremely great deals with these reward programs. I do not pay full price for anything I purchase. Keep your heads up and keep going. We are all here for each other!
Hi Audrey, I love those reward programs! Thanks for the reminder! Linda
I read somewhere that if your neighbor loses their job it’s a recession, if you lose you job it’s a depression.
Hi Chris, wow does that ever make sense. I’m so worried about all the people who are out of work and the restaurants closed for good. Also, all the stores who can no longer make it. The employees may never recover, this the worst situation for so many industries. God bless our world, we need a miracle. Linda
Some reading I have been doing, says the Amish believe in having one year of all needs stored up. Not just food, but fabric, tools, all supplies. The reasoning is, that if something happens, medical, financial, family or weather related, there will not be any temptation to do something wrong or against God.
I wonder how many people had a chance to take stock following the down turn in 2008-2009, and failed to learn from it.
Hi Chris, I wish I could believe people learned from the 2008 disaster. I heard something on National TV that quoted the Marriott owner of all the hotels or whatever. He mentioned this COVID-19 disaster is worse financially than the economic collapse in 2008 and 9-11 combined. That was a powerful statement to me. There are so many people out of work, bankrupt, and suicidal, and some will never recover financially. I believe we are going to have worse times coming. I hope I’m wrong. Linda
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I’m Linda Loosli. I’m the owner and editor of Food Storage Moms. I’m so happy you’ve found us. Our goal at Food Storage Moms is to help “one family at a time.”
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Depression vs Recession: What is a Recession?
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