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I don't get what the point of still using the term "recession" is. Even if it's temporary, this is a full-blown depression right?

throwawaylolx 7y ago
How is it a depression if it's only been a few months? Also the IMF article predicts a 3% contraction for 2020 and a 5.8% growth in 2021, so by what definition is this a depression?
- TheHypnotist 7y ago
  Basically a single month so far.
- jcranmer 7y ago
  A recession is where your neighbor loses their job. A depression is where you lose your job too.
- chadlavi 7y ago
  An unemployment rate of around 13% (as of two weeks ago[1], so probably even higher now) doesn't seem like it's going to just magically resolve itself, and it's going to have drastic effects. 1. https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobles...
  - throwawaylolx 7y ago
    That's just an estimate. From your link: >Be warned, these numbers yield an imprecise estimate of today’s unemployment rate, and the truth could easily be quite a lot higher or lower. This is not an estimate of the official unemployment rate for March, which reports the state of the economy a few weeks ago when the labor market was in better shape, nor is it a forecast for the official rate in April. I don't find it useful to implicitly embed a financial forecasting model in the use of the term "depression".
- logicchains 7y ago
  >Also the IMF article predicts a 3% contraction for 2020 and a 5.8% growth in 2021, so by what definition is this a depression? I wonder how they get those numbers. At least half the US economy is in shutdown right now. Two months of that is equivalent to one month of the whole economy being shutdown; to 1/12th of annual GDP lost, or around 8.3%. Add another month and its 12.5% of output lost.
  - throwawaylolx 7y ago
    >I wonder how they get those numbers. They explain in their article: https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020 https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/we...
    - logicchains 7y ago
      They don't describe the actual algorithm used for the calculation there, but they do state they're assuming 8% of work days lost for countries experiencing a pandemic, 5% for other countries. So I suppose if they assumed 5% work days lost for US, and otherwise 2% GDP growth for the year, then they could get a number around -3%. Only 5% of total workdays lost sounds quite optimistic to me though.
mtnygard 7y ago
I think of the word "depression" as a lagging descriptor. It means there have _already_ been two to three years of low or negative GDP growth. Technically, I think it even takes 2 quarters to call a recession. But I get your point... even if we don't have the stats for six months or two years, we all know where this is going. It's just the standard terminology doesn't help right now.
- chadlavi 7y ago
  This makes sense to me, but people are talking about it in future-forecasting terms already ("this will have been..." etc), might as well start facing the music in those future-perfect statements and say it will probably have been a depression.
nl 7y ago
The term "recession" has meaningful definitions: A recession is two or more quarters of negative economic growth in a row. A depression isn't clearly as defined, but some common definitions are "a 10% decrease in real economic output" or "a recession lasting more that two years"[1]. Neither of these definitions are met. [1] https://en.wikipedia.org/wiki/Depression_(economics)#Definitions https://en.wikipedia.org/wiki/Depression_(economics)#Definit...
- chadlavi 7y ago
  I'm honestly pretty surprised if we not at "a 10% decrease in real economic output" yet in the US
  - frockington1 7y ago
    Healthcare and Technology sectors are probably on the way to all time high in output shortly. The US is a large player if not the largest in both of those sectors. We'll see a big hit but I think these sectors will be able to prevent a recession

throwawaylolx 7y ago

How is it a depression if it's only been a few months? Also the IMF article predicts a 3% contraction for 2020 and a 5.8% growth in 2021, so by what definition is this a depression?

TheHypnotist 7y ago
Basically a single month so far.
jcranmer 7y ago
A recession is where your neighbor loses their job. A depression is where you lose your job too.
chadlavi 7y ago
An unemployment rate of around 13% (as of two weeks ago[1], so probably even higher now) doesn't seem like it's going to just magically resolve itself, and it's going to have drastic effects. 1. https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobles...
- throwawaylolx 7y ago
  That's just an estimate. From your link: >Be warned, these numbers yield an imprecise estimate of today’s unemployment rate, and the truth could easily be quite a lot higher or lower. This is not an estimate of the official unemployment rate for March, which reports the state of the economy a few weeks ago when the labor market was in better shape, nor is it a forecast for the official rate in April. I don't find it useful to implicitly embed a financial forecasting model in the use of the term "depression".
logicchains 7y ago
>Also the IMF article predicts a 3% contraction for 2020 and a 5.8% growth in 2021, so by what definition is this a depression? I wonder how they get those numbers. At least half the US economy is in shutdown right now. Two months of that is equivalent to one month of the whole economy being shutdown; to 1/12th of annual GDP lost, or around 8.3%. Add another month and its 12.5% of output lost.
- throwawaylolx 7y ago
  >I wonder how they get those numbers. They explain in their article: https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020 https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/we...
  - logicchains 7y ago
    They don't describe the actual algorithm used for the calculation there, but they do state they're assuming 8% of work days lost for countries experiencing a pandemic, 5% for other countries. So I suppose if they assumed 5% work days lost for US, and otherwise 2% GDP growth for the year, then they could get a number around -3%. Only 5% of total workdays lost sounds quite optimistic to me though.

mtnygard 7y ago

I think of the word "depression" as a lagging descriptor. It means there have _already_ been two to three years of low or negative GDP growth. Technically, I think it even takes 2 quarters to call a recession. But I get your point... even if we don't have the stats for six months or two years, we all know where this is going. It's just the standard terminology doesn't help right now.

chadlavi 7y ago
This makes sense to me, but people are talking about it in future-forecasting terms already ("this will have been..." etc), might as well start facing the music in those future-perfect statements and say it will probably have been a depression.

nl 7y ago

The term "recession" has meaningful definitions: A recession is two or more quarters of negative economic growth in a row. A depression isn't clearly as defined, but some common definitions are "a 10% decrease in real economic output" or "a recession lasting more that two years"[1]. Neither of these definitions are met. [1] https://en.wikipedia.org/wiki/Depression_(economics)#Definitions https://en.wikipedia.org/wiki/Depression_(economics)#Definit...

chadlavi 7y ago
I'm honestly pretty surprised if we not at "a 10% decrease in real economic output" yet in the US
- frockington1 7y ago
  Healthcare and Technology sectors are probably on the way to all time high in output shortly. The US is a large player if not the largest in both of those sectors. We'll see a big hit but I think these sectors will be able to prevent a recession