It’s a Recession, Not a Depression

Did you have ANY doubts that we have been in a recession?  I sure didn’t.  Yesterday, the National Bureau of Economic Research here in the United States  confirmed it, “Yes, it is officially a recession.”

What may come as a surprise to you, though, is that we have been in a recession here in the United States for a year already, since December 2007.  At least — that’s according to the definition given by the aforesaid authorities.

But it’s a strange thing about recessions.  Just as it takes a while to determine you’re in one, there’s also a lag on the back end.   We’ll likely be coming out of the recession before anybody confirms that.  

That’s why, in a strange way, it’s a good thing that we have been in this recession for a year now.  Recessions by nature are temporary.  Historically the “official recession” doesn’t last long — not more than a year and a half.

Here’s a chart from an article by Jon Hilsenrath of the Wall Street Journal, showing recession time frames:


No one knows for sure how long this recession will last.  Federal Reserve Chairman Bernanke gave a speech yesterday in which he said that weakness in the economy would likely continue for a while.  His remarks struck me as realistic:  not overly optimistic nor pessimistic.  And here’s the important news:  he scoffed at references to the Great Depression of the 1930s, saying “there’s no comparison.”

Chances are the only way we will really know we are coming out of recession and back into growth is by looking backwards, after we have already started the recovery.  And just like it’s darkest before the dawn, we may be ready to come out of this situation precisely when things appear bleakest.  We just may not know it until later, after we look backwards.

Hang in there!


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

24 Reactions
  1. It irks me when people try to compare this recession to the great depression. It’s like trying to compare our current war on terror to something like WW2. It creates unnecessary fear and anxiety in the public, which just makes things worse.

  2. Doesn’t it feel like our media and society is caught up in this “drama cycle?” I don’t know if we have a need to be “victims” or what. But I think we could all benefit from taking it down a notch. It’s like people complaining about snow in Cleveland. It snows in Cleveland – get over it. Or arguing about whether the Earth is warming or not – it doesn’t matter – you have to live, breathe, survve and grow in the evironment you’re given – and stop wishing for something different or talking about how crappy it is. It is what it is – and small business owners need to adapt and deal with it.

  3. A reader emailed to me to say this article came across to him as insensitive to the plight of those going through difificult times.

    I certainly didn’t mean it to be insensitive — not at all. I apologize if it came across that way. I’d never treat such an important subject as people’s livelihoods in a flip manner.

    I feel the effects of the economy, but I’m just weighed down by the focus on how bad things are. It makes me want to give up hope, and I can’t do that. I have to rationalize things so that I don’t give up hope.

    I changed one of the words in the post from “funny” (probably inappropriate even though I did NOT mean it in the sense of being humorous) to “strange” and I’m happy to change other things if you think I’m wrong.

    If you think I am being insensitive, please let me know. Your feedback is important.

    — Anita

  4. I don’t think the article is insensitive at all. If anything, you are giving us perspective that things will get better just like in previous recessions. I am grateful to see the chart you provided because it helps me realize that other recessions have lasted just as long or longer. The media has a knack for making this recession sound like the worst and longest ever. But after looking at the chart, I have hope that we can reverse this recession soon.

  5. I think this post is right on target and should help a lot of people put things in perspective with a better understanding of the system that measures and forecasts the state of our economy.

    How about a follow up post on the problems of monetary policy due to the very lag you just mentioned? : )

  6. I think some of the people who are comparing this to the Depression should rent a documentary on The Great Depression and see if this compares. Sure, we have a different set of problems but what so many people went though at that time for so long is on a different level.

    Ivana – not only do we need to wish for something different, we need to do something about it.

  7. Of course the media are playing this up. They’re out to make money and they learnt a long time ago that fear, uncertainty and doubt makes them oodles. News ain’t news unless it pays the bills.

    One of the things we can all learn from those that experienced both the Great Depression and WW2 is bum up and nose to the grind stone. There are lots of opportunities out there right now if you care to look instead of staying awake at night worrying about the fate of the world economy.

    Great article, Anita. Don’t let the wowsers get you down =)

  8. In my lifetime alone I’ve lived and run businesses during worse times than this. For one thing, I don’t understand all these foreclosures. Does anyone remember 17% home mortgage loan rates in the early 80’s???? But somehow we’re led to believe that people can’t make payments because their rate went up to 8%? The public is not getting the full story here. The American taxpayer is being fed a bill of goods and Congress is bending over for it!!!

  9. And another thing… When are people going to quit crying about the so-called bad times and stand up and take responsibility for making them better???

  10. My suggestion is that you start to follow the Purchasing Managers Index.

  11. My suggestion is that you start to follow the Purchasing Managers Index.

  12. Right Anita. Now it’s not the time to lose hope. Let’s just thrive. After all, it’s a cycle. We’ll soon be on top of the wheel again.

  13. I don’t want to sound naive, but I suspect we may be coming out of this recession soon. Although, clearly this one has been longer than your average recession.

    Why do I say that? Look at all the capital infusion from the governments into the markets. Also, as volatile as things seem, they have been somewhat stable in that they are only volatile within a certain Ceiling and Floor…. for the time being.

    However, most economic plans have only been in action for a couple months. They need some more time to manifest themselves in the statistics and then for businesses/etc to react.

    The challenge will still be the real estate market. But there are some programs in the works, including one that will offer loans at really low rates, backed by the government, to qualified buyers (first time, with income verification, reasonable credit,etc).

    By the way – for those that have resources – this is the time to try an expand your business. 🙂

  14. Since Bernanke is supposed to be the leading authority on The Great Depression I guess we should feel pretty good about where we are not even being comparable to what they faced in the 30s. But i stll get the feeling that we’re in unchartered waters, and no one really knows exactly what we’re facing. But as entrepreneurs and small business people, do we really ever know? We just have to keep moving on and doing what we need to do.

  15. Amen, Anita!! I hear the comparisons to the Great Depression and it strikes me as fear-mongering. And while i do not wear rose-colored glasses, i find the media’s attention and focus on the recession to be particularly unhelpful. It would be interested to see if the media had to go hat-in-hand to Washington and plead for funds as the automakers are now having to do.

    I see light at the end of the tunnel in your post here and i’m thankful for a breath of fresh air. And i’ll go remind my clients, many of whom are startups, that they just need to hang in there.

  16. Hi Brent,

    I don’t think we really ever know what will happen next. If that’s the case, there’ll be no more problems to solve for!

  17. Amen Rose! Cue the choir and pass the plate!

  18. I try to remember that the media are not a public service — they’re for-profit ventures, and they report what sells. They’re going to keep reporting the worst of the worst, not the story behind the story.

    That said, the last few months sure seem worse than the last 5 recessions that show on your chart, at least for my 25-year-old business. It seems this time that NO ONE is spending — but then my company is also less than 70 miles from Detroit, and that could have something to do with it. The auto industry affects so many businesses around here, and my vision is a bit cloudy.

    I’m encouraged by your article, though. Let’s look for that red bar to stop growing soon.

  19. Hi Marcia, I’m sorry to hear that no one is buying. I am from Cleveland, and we’re in the midst of the auto industry problems here, what with all the auto suppliers here and the auto plants in this area. It’s good that you can feel hopeful.

    I don’t make light of the situation, and I don’t have rose colored glasses, either. I just strongly feel that our attitudes can help us or hurt us, and so we need to manage our attitudes to stay positive. That is one thing each of us can do to help climb out of the trough we are in.

    Hang in there,

  20. Anita,
    Definitely! That’s why my husband and I have taken to watching world news instead of local or national — it puts things more in perspective.

    I do believe it’s possible to make things worse by dwelling on them, and that maintaining forward momentum and a positive outlook are imperative.

    I also like what Ivana said, “stop wishing for something different or talking about how crappy it is. It is what it is – and small business owners need to adapt and deal with it.”

  21. I have been “downsized” twice in my life, both times during recessions. The first time I was in complete shock for a week. I couldn’t believe I’d been let go.

    The second time around my husband had left his law firm job to go to work for a hitech start up. That turned out to be a big mistake when the company went belly up one day. We both lost our jobs in the same month. Money was SO tight for almost a year.

    As scary a time as it was, looking back it was the best thing that could have happened to us. We were forced to get a lot more serious about work than we had ever been before. My husband eventually landed another job in a law firm. I started a consulting business, and I learned how to sell, really sell. When you are faced with missing the mortgage payment, and making a sale, you MAKE THE SALE.

    The situation is tight once again in my area (Wisconsin) but I now have the confidence having gotten through bad times before, to know I can make it.

    I am calling each of my clients every couple of weeks whether I have a reason to or not. I am letting them know how much I appreciate them and that I am available to work with them cost effectively during these times.

    I have already gotten a couple of new projects from these proactive calls.

  22. Let’s not forget that the recession is a time for creating new business models. It’s a time for entrepeneurs and entrepeneurial-thinking.

  23. Let’s not forget that the recession is a time for creating new business models. –> Hi Eamon, I’m sorry but I did not clearly get that. Why do you think so?

  24. Hmmm….Maybe you aren’t comparing this to the Great Depression but I know others that are. I was talking to my Landlady who lived
    through the great depression and she said this one (meaning the current recession) is going to be worse. I did not live through the great depression so I have no idea on how the current situation compares but I listened to people who did live through it. I don’t know what they see that I don’t but I will tell you that my landlady said this one is going to be worse.