Depression and recession are terms used to define the economic hardships of a state or a country but they have different meanings based on the economic arguments. Depression can be defined as the economic decline taking place in a large duration of time, in this case the economic decline leads to a ten percentage gross domestic product, consequently depression can be regarded as a recession that lasts longer and its profound effects are high in business field for example the economic decline of 1930.On the other hand recession can be defined as a small period of economic decline for example the economic decline which took place in 1910 and 1930, consequently the recession effect is less compared to the depression effect which is so severe.
At the same time recession can be regarded as the period when the business activities climbs to the top of the economic graph, but unfortunately starts to decceralate, until the period when the business activities comes to the base of the economic graph (Siegel, 2002).Although some measures has been put in place by the Federal government of the United States of America to prevent the chances of depression and recession from taking place, some of the economic analyst predicts that there are chances of depression and recession taking shape in the United States of America. Barro and Ursua,Harvard University professors, during their argument which was posted in the National Bureau of Economic Research last month approximated the probabilities of minor depression at about 20% which is has the occurrence chance of 0. 2 and a major depression at about 3% which is having the occurrence chance of 0.
03. Although depression occurred in the 1930, the current depression has taken a different perspective and shape.This has been considered as the worst economic depression since the occurrence of the American depression of 1930. The current depression can be recorded as the longest recession recorded in the world history which has occurred for a period of seventeen months. Consequently the current depression is more widespread compared to that of 1930.
At the same time the decrease in industrial production, currently is high which is at 86% cut. The current depression is characterized by high unemployment rate of the citizens, which is accompanied with low household wealth. During the 1930 depression there was imposition of stiff tariffs by the gorvenment. that killed international trade which was accompanied with regulation of prices and production levels of goods. Gross domestic product decline in the current depression is low for instance its 3. 4% compared with that of 1930 which was recorded at 26.
5% decline.Although most of the economist argue that depression are caused by lack of managerial plans, the methods suggested by this economics on how to come out of the depression varies depending on the economic school each attended. Keith Hembre s suggestion is one of the appealing plans; this economist suggests that the economic stimulus bill worth 787 million USA dollars which was passed by the congress in February will increase the economic growth.The economic stimulus was established by the American and Reinvestment Act of 2009. This bill is important since it provides the health coverage to the unemployed citizens. It focuses on the trade adjustment assistance and provides tax credit and tax exemption programe.
moreover this bill gives importance to the renewable energy, create jobs and cut taxes to families.
