Korean Job Discussion Forums

[MA_TESOL]

Economist, can you please explain to me if a recession is considered an economic crash? Is a recession a needed function of economic cycles?

[bobbyhanlon]

crash is a little vague and also extreme-sounding.. and we don't usually talk about an economic crash. financial markets can crash, so a stock market crash would be where stock prices fall massively on one day.
a recession is economic contraction (ie. negative gdp growth, for two or more quarters). it would of course be considered bad but i don't know if it could be said to be a crash.
recessionary forces are most likely inevitable but sound monetary and fiscal policy can often head off a proper recession. who knows what will happen this year.. right now there is double trouble, because the housing market and public spending are going down, as well as the banking crisis; these things point to recession, but meanwhile inflation is rising. in the us, the federal reserve would like to cut rates to get the economy moving, but they can't do it too much because inflation could get out of control.

[mindmetoo]

In 1980 we had a nasty recession. High interest rates. A cold war. The American auto industry was in ruins.

Lots changed 5 years later.

Economies change. Sucks to be a buggy whip maker. Good to be a pipe fitter for the oil sands industry.

[browneyedgirl]

[4 months left]

A crash can occur and take a long time to recover from - 1929 or recover relatively quickly - 1987.

A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).

Recession is a normal (albeit unpleasant) part of the business cycle. A recession generally lasts from six to 18 months.

Interest rates usually fall in recessionary times to stimulate the economy by offering cheap rates at which to borrow money

[Juregen]

A crash refers more often to stock markets then whole economies, but as some know, in the 30's, that meant the same thing.

A stock market crash doesn't mean the economy will do bad, its just that investors are unsure and want to reduce risk. Best examples are real estate bubbles and the tech bubble early 2002.

a recession is a very delimited occurrence (http://en.wikipedia.org/wiki/Recession)
Economic growth has to be negative for longer then one period.