Recessions and depressions are similar in that they both signal a downturn in the economy. But depressions are far less common and indicate a more severe, widespread impact.
Compared with depressions, recessions are easier to define. In fact, a nonprofit organization called the National Bureau of Economic Research, or NBER, continually tracks business cycles and determines when recessions begin and end.
Generally, a recession is when the economy stops growing. The NBER defines it as such: “a significant decline in economic activity that is spread across the economy and that lasts more than a few months”. There’s a bit more to the definition than that, so read more about what a recession is.
The economy has cycles, and so recessions are usually predictable, says Lynnette Khalfani-Cox, CEO and a founder of TheMoneyCoach.net, a financial education company.
A recession may mean stagnant wages, higher prices and less consumer spending, she adds.
This article was written by Laura McMullen and originally published on www.nerdwallet.com