What is the definition of “depression”?

More from me at BlownMortgage:

It is difficult to believe but earlier this year people were still debating whether or not we were in a recession. The debate broke down along the lines of, “We haven’t met the technical definition of a recession” vs. “If it smells, like a duck, quacks like a duck and looks like a duck then it’s a duck.”

One of the reasons for the debate was because there are so many different definitions of a recession.

The standard definition used by idiots and journalists (like me!) is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

Idiots and economists (like them!) don’t like this because it leaves out the unemployment rate and consumer confidence as indicators. “By using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.” Sadly, that’s not going to be an issue this time around.

BTW, now that the extension of unemployment benefits has passed the Senate expect to see a sharp increase in the unemployment rate — which only counts people who are collecting unemployment insurance. You are no longer officially counted as unemployed if you are not collecting insurance. A lot of people who used up their benefits but aren’t employed will now re-appear magically on the roles. They will just as magically disappear in seven weeks when their benefits are used up and the rate will go down again. However, those people won’t be any more employed.

3 thoughts on “What is the definition of “depression”?

  1. Sadly, the only question that remains is how long will this recession last. The chatter among the uninformed (including yours truly) is that the length of the recession will be measured in years, not quarters or months. Does this mean that we will revert to the practices of the 1930s when dentists such as my college roommates father were paid by farmers in potatoes, tomatoes, and eggs?

  2. Except today, real farms with real farmers are so scarce, they’ll probably make out pretty well. I have my shingle all painted: Will install router and network for food.

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