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Understanding the vocabulary that got us into this economic mess

Monday, March 23, 2009 | 12:01 a.m. CDT

“Recession is when your neighbor is out of work. Depression happens when you are out of work.”  

When asking neighbors and friends as to how much they understand basic economic language, I find that too many have no idea how the numbers are crunched and what the economic terminology means. So much so that many, too many, rely on the economic reporters to explain things and to possibly give the monetary neophyte direction.

I tend to watch the Sunday morning talking head shows while switching to CBS’s “Sunday Morning” for a sanity check.  Last Sunday, the topic, as it has been for almost 18 months, was the “economic downturn,” whatever that means. NBC’s “Meet the Press,” CBS’s “Face the Nation,” and “Fox Sunday” are always on my agenda.  Unfortunately, I still do not understand many of the terms used beyond their academic definitions.  So I did what every good communication expert should do in these situations, I asked.  

Research of non-academic economic jargon is not as easy as one would think. My ready source of information is LinkedIn.com, a professional (mostly) social network, with its hundreds of thousand members. It began when I asked, “What is the difference between ‘recession’ and ‘depression’?”

I limited my investigation of these two terms by addressing the question to government, political, news and speechwriter groups. Unfortunately, most of the answers where still academic or, as quoted above, whimsical. My friend Rebecca Tweed, a political adviser and public relations professional from Portland, Oregon, gave me the best response from the 50 plus I received.

“Recession: Stated as simply as possible, it's when economic growth literally takes a ‘recess,’ much like when we were small children in school and took breaks from class. A recession is when you are on (or) have been on the decline for a significant period of time and more importantly and notably, is when the pace of the decline is happening more rapidly (than) growth.

“Depression: In layman's terms, is a recession that lasts for a more significant period of time. It is also usually recognized when resources or alternative options that could typically turn a recession around, are no longer available.

“In brief and simple terms — both are an economic downturn. It is the time table (that) makes the semantic and significant difference between the two.”

OK, I feel better now. That is until I start thinking of another term that is thrown around by the “talking heads,” “unemployment rate.” In February, we learned that more than 650,000 jobs were lost. According to Rep. Eric Cantor, R-Va., that equates to 15 jobs lost every minute.  However, this number does not include those who found new work, but considered the “underemployed,” those forced to work at a job below their knowledge and academic qualifications.  

This is not to be confused with those who chose these jobs. Like my friends Jim, who has an MBA but has chosen to work as a laborer in an ice cream manufacturing plant, and Abby, who, with a Masters in Physical Therapy, is a professional clown. Mind you, Abby makes $50,000 to $75,000 a year as an entertainer. 

Then there are the terms “inflation,” “deflation” and “stagnation,” indicating varying degrees of growth or decline of the GNP, Gross National Product. GNP is a function of the GDP, Gross Domestic Product, which is the value of all finished products and services produced in an annual period. However, how do you set a value of a “service?”

Because a “service” is a virtual commodity, the value is based on what the market is willing to pay and the provider is comfortable to ask. Accordingly, I now charge the equivalent to the GNP of Guatemala. I am worth it… I think. I am not really sure how much that is.

Along with our global economic worries, this depression, we should be very aware of our mental condition, our personal depression from perceived and real economic losses. Maybe the economy just needs some Prozac and a bowl of chicken soup to feel better.

David Rosman is a business and political communications consultant, professional speaker and college instructor in communications, ethics, business and politics. Besides the Missourian, David is also a featured columnist for MissouriTribune.com and TRCB.com.  He welcomes your comments at ProfDave1011@netscape.net. 

 


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