A recession is a downward trend in the
business cycle, one that is characterized by a decline in production and employment. This trend lowers household income and spending, which consequently causes many businesses and households to delay making large investments or purchases.
A 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. Another difference between a recession and a depression, in addition to the severity and effects of each, is that recessions may be limited geographically (limited to a single country), whereas depressions (such as the Great Depression of the 1930s) can occur across many nations.
