The 2008 Financial Crisis - Are we in a recession or a depression?
With Lehman Brothers gone, banks failing, and the stock market swinging wildly, the news is terrifying. My 401(k) looks horrible. People are using terms like "Great Recession" and some are even whispering about another Great Depression. For the economists or financially savvy folks here, what's the real difference, and where are we actually headed?
5 个回答
Technically, a recession is two consecutive quarters of negative GDP growth. We're there. A depression is a severe, prolonged downturn with catastrophic unemployment (think 25%). We're not there yet. This is a severe recession fueled by a credit crisis. The government bailouts (TARP) are trying to prevent a depression.
It feels like a depression if you're losing your job or your house. The technical definitions don't matter on Main Street. The housing bubble popping has wiped out so much wealth. The psychological impact is depression-level fear, and that drives the economy down further.
The key difference is the global response. In the 1930s, countries raised tariffs and made it worse. Now, central banks worldwide are cutting rates and injecting liquidity together. It's unprecedented coordination. That should, in theory, keep this from becoming a 10-year global depression.
Watch unemployment. That's the true measure. If it climbs into the mid-teens and stays for years, we're in depression territory. Right now, it's bad but not catastrophic. The auto industry collapse could be the next domino. If GM fails, we're in for a world of hurt.
My advice: don't panic-sell your stocks if you can help it. Markets always recover, but it takes time. This is a time to be cautious, save cash, and spend on essentials. It's a recession for sure, but we've been through these before (early 80s, early 90s, early 2000s). This one just hurts more because it's in our homes.