Part IV: The Economic Cycle
Generally, a “recession” is defined as a decline in output (in other words, the GDP) for two consecutive calendar quarters. So, if output drops from the last calendar quarter and this happens again in the next calendar quarter, the economy is usually viewed as being in a recession. The term “depression” doesn’t have a widely accepted definition like the term “recession,” but it generally refers to a particularly severe recession. How severe? In the last hundred years, only the “Great Depression” that occurred in the 1930s is consistently referred to as a depression.