Economic Depression and a Recession

¶ … Economic Depression and a Recession

In 1978 Alfred Kahn, one of Jimmy Carter's economic advisers, was chided by the president for scaring people by warning of a looming depression. Mr. Kahn, in his next speech, simply replaced the offending word, saying "We're in danger of having the worst banana in 45 years." (Economist.com, 2008)

The real point of this article is not to just ask the question, but, as Mr. Kahn's joke implies, to subtly state the author's view that chances are, if we are not in a depression now, we may be in the near future.

The article points out that the same "experts" said that the U.S. housing market could never fall as precipitously as it has, are the ones who are saying, "recession, yes, but depression, no."

The whole tone of the article is rather tongue-in-cheek to say that those who think it can't happen, had better think of another name for it if they don't want it to become fact.

We do find out, under the hidden agenda of the article, that it is difficult to know the difference between a recession and a depression, because -- wait for it -- no one has ever really been able to define "depression." The popular rule of thumb for a recession is two consecutive quarters of falling GDP.