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Recession, Depression, Inflation, Stagnation?: Economic Concepts That Matter
The public is often bombarded with a variety of economic terms that often only confuse them rather than help the untrained understand them better. How many times have we heard terms like recession, depression, inflation, stagnation, etc., but many have a limited understanding of what it means? As a former licensed representative and officer of a financial services company, I have learned and developed what these mean and the impact they can have. I often try to make others feel more comfortable by joking that the difference between a recession and a depression is that it's the former...
Recession, Depression, Inflation, Stagnation?: Economic Concepts That Matter
The public is often bombarded with a variety of economic terms that often only confuse them rather than help the untrained understand them better. How many times have we heard terms like recession, depression, inflation, stagnation, etc., but many have a limited understanding of what it means? As a former licensed representative and officer of a financial services company, I have learned and developed what these mean and the impact they can have. I often try to make others feel more comfortable by joking that the difference between a recession and a depression is that it's the former when it happens to you, but the latter when it affects me! With this in mind, this article attempts to briefly consider, examine, review and discuss these four concepts/principles as well as their meaning and representation.
1.Recession:A recession is generally defined as a period of temporary economic/financial decline as measured by trade, industrial activity and other economic indicators for at least two consecutive quarters. It is usually checked against gross domestic product or GDP, which measures overall economic performance in a particular country. Often the Federal Reserve Bank uses various tools/methods to improve activity, including lowering interest rates, etc.
2.Depression:If the recession becomes even more severe and lasts for a significantly longer period of time, it is often considered a depression. We could either observe a particular component of the economy that is depressed, such as: B. housing construction, or sector-specific or overall. Almost everyone is familiar with the period that began in 1929 and lasted several years and is called the Great Depression.
3.Inflation:Inflation is the rate at which a particular currency (or currencies) falls, resulting in an overall increase in the prices of most products and services. The Federal Reserve Bank's usual pattern is to increase the cost of borrowing money, also known as interest rates. In most cases, when these increase significantly, many people find that their wages are not keeping up with the rate of inflation!
4.Stagnation:When we talk about economic/financial stagnation, it refers to a significant period of time with little or no activity, growth and/or significant development! When this happens over a long period of time, it generally results in a loss of employment opportunities and often more unemployment. Historically, governments have used various economic stimuli to boost overall economic activity and hopefully return us to a stronger, better financial situation.
When it comes to money - the more you know, the better - we could be prepared for eventualities. Learn as much as you can, for your own interests.
Inspired by Richard Brody