Recession

The phrase ‘credit crunch”‘and the word ‘recession’ have been bandied about with a sense of foreboding for the past few months and so we thought that it would be useful to look in a bit more detail about the meaning of ‘recession’ in particular. 

According to the Oxford English Dictionary, in the economic sense, the noun ‘recession’ is:

“A temporary decline or setback in economic activity or prosperity”(1)

It was first used in 1929 by The Economist describing the economic situation in the United States at that time.  However, as you can discover from other reference books, using services such as Oxford Reference Online, there are more technical or detailed descriptions about when an economy officially enters a recession.  According to the Dictionary of Finance and Banking, it is:

“A slowdown or fall in economic growth rate. A recession is defined by the US National Bureau of Economic Research as a decline in gross domestic product in two successive quarters. A severe recession is called a depression. Recession is associated with falling levels of investment, rising unemployment, and (sometimes) falling prices.”(2)

The Handbook of International Financial Terms states that it is:

“A state of an economy when characterized by falling output and employment. Officially, in the UK, a recession exists after four successive quarters of negative growth in gross national product. Sometimes called a depression, especially when the economic downturn looks persistent.” (3)

However, perhaps the most apt description was provided by Harry S. Truman in Observer 13 April 1958:

“It’s a recession when your neighbour loses his job; it’s a depression when you lose yours.” (4)

————————–
1. OED Online, Oxford University Press, 2008, http://dictionary.oed.com/cgi/entry/50199086, Accessed 21st November, 2008
2. “recession”: A Dictionary of Finance and Banking. Ed Jonathan Law and John Smullen. Oxford University Press, 2008. Oxford Reference Online. Oxford University Press.  Loughborough University.  21 November 2008  http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t20.e3137
3. “recession”: The Handbook of International Financial Terms. Peter Moles and Nicholas Terry. Oxford University Press 1997. Oxford Reference Online. Oxford University Press.  Loughborough University.  21 November 2008  http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t181.e6319
4. “Truman, Harry S.”  The Concise Oxford Dictionary of Quotations. Ed. Susan Ratcliffe. Oxford University Press, 2006. Oxford Reference Online. Oxford University Press.  Loughborough University.  21 November 2008  http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t91.e2417

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