The definition of a recession can be pretty technical. The short version is if there’s a drop in gross domestic product (GDP) for two consecutive quarters. In the United States, the National Bureau of Economic Research (NBER) — a nonprofit, nonpartisan economic research organization — decides if we’re in a recession by looking at signs of sustained economic decline across many parts of the economy. The data points it examines include real income, or individuals’ purchasing power after considering inflation; employment levels; how much industrial producers output; how much wholesale retailers sell; and GDP, or the value of all the goods and services produced during a time period.
A depression is a severe and prolonged downturn in economic activity. It may be defined as an extreme recession lasting three or more years, leading to a decline in real gross domestic product (GDP) of at least 10% in a given year. The simple definition is a recession lasting more than three years.
There’s a lot of talk about the prospects of a recession being high, but nobody is talking about a depression. The uncertainty caused by Donald Trump’s on-again, off-again tariffs in his attempt to blackmail the world into doing his bidding has economic analysts suggesting a recession is more likely than not. J.P. Morgan continues to place the probability at 60%.
“The latest unwinding of the Liberation Day tariffs reduces the shock to the global trading order, but the remaining universal 10% tariff is still a material threat to growth and the 145% tariff on China keeps the probability of a recession at 60%.”
Amy Crews Cutts, an independent forecaster, says she is 99% confident that a recession would take hold within a year. Recessions aren’t all that uncommon, and the trend has been that they are short-lived, followed by long recovery periods. Since 1982, the three recessions have averaged 11.3 months, including the Great Recession, and the four expansions, including the current one, have averaged more than 95 months and counting. Under normal circumstances, a recession wouldn’t be great news, but also no cause for predicting disaster. Suggesting a recession would become a depression at this point would probably be considered irresponsible, if not for the idiot in charge of the economy.
The Federal Reserve Board of Governors' present formation is dictated by the Banking Act of 1935. It was purposely designed to be independent of the Executive Branch, although the president appoints its members. Governors serve 14-year terms and cannot be fired by whoever is president at the time. The Fed helps set fiscal policy, including raising and lowering interest rates, to help control inflation and other factors of the economy. The term of the current chairman, Jerome Powell, expires May 15, 2026. Donald Trump wants to fire him now.
We haven’t had another Great Depression since 1929 because an independent central bank has kept politicians and banks from doing stupid things to destroy the economy. Trump wants the Fed to lower interest rates immediately, which will only add to the inflationary effects of his tariffs. Trump wants to replace Powell with a flunky who will do his bidding, making that person the opposite of independent.
To believe that the predicted recession will not lead to a depression is to believe that Donald Trump, acting on his instincts and unhindered by any checks and balances, will be able to end a recession in less than three years. I point to Trump’s six corporate bankruptcies and 34 felony convictions to suggest he is not that person.
There’s no point suggesting a depression is coming until the recession arrives. Once a recession hits, there’s no reason to believe a depression can be avoided as long as Trump is in charge.
This post originally appeared on Medium and is edited and republished with author's permission. Read more of William Spivey's work on Medium. And if you dig his words, buy the man a coffee.