The D Word

Someone has finally used the D word,Depression, and I’m not talking about the sort that can be fixed with pink and purple pills. No this Depression was used to express Japan’s economy.
This article states that Japan’s economy shrunk by an annualised 12.7% over the December quarter (interestingly they didn’t use the work annualised on BBC, CNN or TV1 news yesterday which gave me cause for greater concern :-0) AND they don’t state that Japan is actually in a Depression but what they do say is that the economy fits the description

The collapse in growth fits the profile of a depression — a deep recession in which annual GDP falls by 10 per cent or more.

This definition just leaves us to define ‘deep recession’

However another definition doesn’t leave that much wriggle room

A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent.

We are just left defining the word ‘real’ in ‘real GDP’.

Truth is there is no formal definition of Depression, the word recession was employed after the 1930’s Depression as previously every downturn was termed a Depression but obviously a small downturn did not fit as a Depression in the minds of those who had lived through a real one. The panic that the use of the D word would have conjured up would have been unsettling too.

Throughout this current economic cycle commentators have been loathed to use the word Depression; I guess it still conjures up images of soup lines and those doen’t fit well with the luxurious positions we have found ourselves in, in recent years. I am also NOT saying that New Zealand is heading for a Depression, nor am I saying that the world is plunging into a Depression, what I am simply  saying is that someone has finally used the D word, correctly or not; and I find that interesting

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