Great Depression Vs Great Recession Essay

Many countries will either experience a depression, recession, or both at some point in time. A depression is much more severe than a recession. A recession leads to a depression. The best way to determine whether your country is going through a depression or recession is to look at the changes in the national gross product. When a country’s gross domestic product declines by more than ten percent, you are encountering a depression. In the United States, we experienced a the Great Depression during the 1930’s while the Great Recession started in mid 2007. The Great Depression was a result of people buying on margin and buying on credit. The economic boom in the 20’s led to people buying cars, houses, refrigerators, and things they could not afford. Before anyone could pay back this debt, the stock market crashed and everyone ended up in major debt. Businesses had to cut back on employees and wages and families had to adjust to a new kind of living. Women went back to being homemakers, even though women attended college and received degrees, there were no jobs for them. Children did not go to school anymore because there was no money to keep the schools open. The banks failures was at 50%. The states response to all of these problems was to raise taxes and
cut spending, which did not work in the long run. The Great Recession lasted form December 2007 to June 2009. During this time, 8.4 million jobs were lost and there was a very slow recovery. The cause of the Great Recession was known as the “Housing Bubble,” which meant that the household debt was increasing. This recession was by far the worse recession since the Great Depression. The United States was recovery for over two years and the people still did not receive their jobs back right away. American households lost roughly 17 trillion dollars of net worth income. The rate of bank failures was at 0.6% and the states response to all of this was to give fiscal relief to states to lessen impact of tax increases. Today, the United States is doing everything they can do to not experience another Great Depression or Recession.
Both of these were hard to cope with for families because of the lose of jobs. The difference between the two is the Great Depression is when the economy hits rock bottom while the Great Recession is the slowing down of the economy. When an economy is experiencing high unemployment rates for more than two years, the economy is considered to be in a depression. The unemployment rates for the Great Depression were much higher than the Great Recession; 25% to 8.5%. All in all, the Great Depression was much more severe than the Great Recession but they are both something that will never be
forgotten.