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The global economic outlook is deteriorating because of the COVID-19, rising interest rates, and a cost of living crisis, UKRAIN RUSSIAN WAR.
YOU DON’T HAVE TO BE AN ECONOMIC GURU TO KNOW THAT THERE’S LITTLE DOUBT THAT A RECESSION IS INEVITABLE.
IF THINGS WORSEN WE ENTER A DEPRESSION WITHIN THE NEXT YEAR.
The Ukraine/Russia. It’s taken a human toll of tragic proportions, driven energy and food prices higher, and created macro uncertainty around the world reducing the value of the global economy by $1 trillion.
It is already exacted a heavy toll. Though the outcome is unclear, the war will continue to weigh on global economies, with ramifications for central bank policy, energy, commodities, and more.
So what is the difference between a Recession and a Depression?
A recession is a downtrend in the economy that can affect production and employment, and produce lower household income and spending. The effects of depression are much more severe, characterized by widespread unemployment and major pauses in economic activity. Recessions can also be more localized, while depressions can have a global reach. ‘
When your neighbor loses his job it’s a recession; it’s a depression when you lose yours.
A depression is when wages are cut so low no one makes enough to live on and a recession is when the price of everything goes up so high no one makes enough to live on.
Depression is a major downswing (far more severe than a downward trend) in the business cycle; one which is characterized by sharply reduced industrial production, widespread unemployment, a serious decline or cessation of growth in construction, and great reductions in international trade and capital movements.
Even though some sectors of the economy may be presenting less than favorable conditions to both businesses and consumers, we aren’t in a depression right now.
Only time will tell what the future has in store.