What Exactly Is a Recession?
Most textbooks define recession as when Gross Domestic Product contracts for two consecutive quarters or more. In the real world, there are many more economic indicators that signal a recession. GDP growth will usually slow for several quarters before it turns negative. That's in response to sluggish consumer demand. More »
What Exactly Is a Depression?
A depression is an extended recession that has years, not quarters, of economic contraction. Unemployment reached 25%, housing prices plummeted 30%, and prices fell 10%. More »
Where Are We in the Current Business Cycle?
The best way to find out if we are in a recession or a depression is to understand where we are in the business cycle. It usually follows the peak, which is signaled by irrational exuberance and asset bubbles.More »
The Great Depression of 1929
A Depression on the scale of that in 1929 could not happen exactly the way it did before. Central banks around the world, including the U.S. Federal Reserve, are so much more aware of the importance of monetary policy in regulating the economy. Find out what caused the Depression, how bad it was, and what finally ended it.More »
Causes of Economic Recession
The underlying cause of any recession is a loss of business or consumer confidence. There's 11 events that trigger this panic reaction. Without confidence in the future, consumers will stop buying, and businesses will lay off workers, creating a downward economic spiral of unemployment, businesses failures, and bankruptcies.More »
Could a Stock Market Crash Cause a Recession?
Since stocks are a piece of ownership in a company, the stock market is basically a vote of confidence in the future of all these companies, and therefore the U.S. economy itself. A drop of 11% in a quarter indicates a sustained loss of confidence.
If the confidence is not restored, and the stock market continues to fall over a sustained period of time, that would indicate the start of a bear market. This could hurt the economy more, pushing it further towards a recession.More »
During a Depression, Is My Money Safer Under the Mattress?
During the Depression, there were many bank failures. This made people take their money out of the bank, known as a run on the bank. Fortunately, you don't have to hide your money under a mattress. The Federal Deposit Insurance Corporation insures 100% of your savings, checking and money market deposits. So, as long as you are within their guidelines, your money is safe in a bank. Furthermore, if it is in a bank, you may be able to earn interest, and lose less to inflation. More »
Is the U.S. Headed Towards the Second Great Depression?
If the U.S. were to experience an economic downturn on the scale of the Great Depression, your life would change dramatically. Here's why it probably won't happen.More »
Bear Markets and Recessions
Bear markets usually coincide with a recession. These 20% declines in stock market prices can also signal an impending recession, or be the trigger that causes one.More »
The History of Recessions
The Great Recession of 2008 was the worst recession since the Depression. However, the 1980 recession was nearly as bad, caused by high interest rates needed to curb stagflation. That was caused by attempts to end the 1973 recession, which led to the demise of the gold standard. More »
The Strange Ups and Downs of the U.S. Economy
Recessions are measured by GDP. Here's a shart showing economic output, growth, and the standard of living (as measured by GDP per capita) since 1929. More »