Editing Economic depression (section)

==Definitions==
In the United States the [[National Bureau of Economic Research]] determines contractions and expansions in the business cycle, but does not declare depressions.<ref name="nber.org">{{cite web |url=https://www.nber.org/cycles/recessions_faq.html |title=The NBER's Business Cycle Dating Procedure: Frequently Asked Questions |publisher=Nber.org |access-date=7 September 2012 |url-status=live |archive-url=https://web.archive.org/web/20121008141654/http://www.nber.org/cycles/recessions_faq.html |archive-date=8 October 2012 }}</ref> Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology ([[potential output]]).<ref>{{cite web |url=http://www.infoplease.com/ce6/history/A0821657.html |title=Private Tutor |publisher=Infoplease.com |access-date=7 September 2012 |url-status=live |archive-url=https://web.archive.org/web/20120913025403/http://www.infoplease.com/ce6/history/A0821657.html |archive-date=13 September 2012 }}</ref> Another proposed definition of ''depression'' includes two general rules:<ref>{{cite news | url=http://www.economist.com/finance/displaystory.cfm?story_id=12852043 | newspaper=The Economist | title=Diagnosing depression | date=30 December 2008 | url-status=live | archive-url=https://web.archive.org/web/20090215002935/http://www.economist.com/finance/displaystory.cfm?story_id=12852043 | archive-date=15 February 2009 }}</ref><ref>{{cite web |url=http://businesscycles.info/recession-definition/ |title=Home Improvement Tips and Techniques &#124; Business Cycles |access-date=15 April 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090202110823/http://businesscycles.info/recession-definition/ |archive-date=2 February 2009 }}</ref>
# a decline in real GDP exceeding 10%, or
# a recession lasting 2 or more years.

There are also differences in the duration of depression across definitions. Some economists refer only to the period when economic activity is declining. The more common use, however, also encompasses the time until the economic activity has returned close to normal levels.<ref name="nber.org"/>

A recession is briefly defined as a period of declining economic activity spread across the economy (according to NBER). Under the first definition, each depression will always coincide with a recession, since the difference between a depression and a recession is the severity of the fall in economic activity. In other words, each depression is always a recession, sharing the same starting and ending dates and having the same duration.

Under the second definition, depressions and recessions will always be distinct events however, having the same starting dates. This definition of depression implies that a recession and a depression will have different ending dates and thus distinct durations. Under this definition, the length of depression will always be longer than that of the recession starting the same date.

A useful example is a difference in the chronology of the Great Depression in the U.S. under the view of alternative definitions. Using the second definition of depression, most economists refer to the Great Depression, as the period between 1929 and 1941. On the other hand, using the first definition, the depression that started in August 1929 lasted until March 1933. Note that NBER, which publishes the recession (instead of depression) dates for the U.S. economy, has identified two recessions during that period. The first between August 1929 and March 1933 and the second starting in May 1937 and ending in June 1938.<ref>{{cite web |url=https://www.nber.org/cycles/ |title=US Business Cycle Expansions and Contractions |publisher=National Bureau of Economic Research |access-date=1 October 2008 |url-status=live |archive-url=https://web.archive.org/web/20090219215409/https://www.nber.org/cycles/ |archive-date=19 February 2009}}</ref>