what is a depression 
a depression is a severe and prolonged downturn in economic activity a depression may be defined as an extreme recession that lasts three or more years or that leads to a decline in real gross domestic product gdp of at least 10 in a given year 1 depressions are far less common than milder recessions both tend to be accompanied by relatively high unemployment and relatively low inflation the u s has experienced at least 34 recessions since 1850 this includes the great recession of 2008 2009 and the covid 19 recession of 2020 2 but it has had only one depression which lasted from 1929 until 1941 and is known as the great depression 3the number of recessions that the u s experienced between 1850 and 2007 according to the national bureau of economic research 2 those were followed by the great recession of 2008 2009 and the covid 19 recession of 2020 for a total of 34 recessions since 1850 4understanding depressionstwo major factors characterize a depression consumer confidence falls dramatically as people begin to worry about their job security and pull back on spending and investments decrease as businesses and individuals stop investing whether that means building a new factory developing a new product or buying stocks economic factors that characterize a depression include economists disagree on the duration of a depression some argue that a depression encompasses only the period that is plagued by declining economic activity other economists argue that the depression continues up until the point that most economic activity has returned to normal depression vs recessiona recession is considered a normal part of the boom and bust business cycle it is generally defined as a decline in gdp for at least two consecutive quarters given the lag in collecting data on economic activity a brief recession may be over before it is confirmed to have happened a depression lasts for years and its consequences are far graver almost 25 of the u s population was unemployed during the depths of the great depression and that figure does not include the farmers who lost their homes and their land due to cratering prices for their produce 5recessions are much more common there were 32 recessions in the u s between 1850 and 2007 and just one depression 2 since then the u s experienced the great recession of 2008 2009 and the briefer and less disruptive covid 19 related recession of 2020 as noted a recession is defined as at least two consecutive quarters of negative gdp growth even if that decline is slight 1 a depression is defined by a drop in annual gdp of 10 or more the great depression lasted for a decade 3a recession is defined as two or more consecutive quarters of decline in gdp growth no matter how slight the decline is 1 a depression is defined by a drop in annual gdp of 10 or more example of a depressionthe great depression is to this day the worst economic downturn in modern world history lasting roughly a decade many historians trace its origins to october 24 1929 when the stock market crashed in an event afterward known as black thursday 5 after years of reckless investing and speculation the stock market bubble burst and a huge sell off began with a then record 12 9 million shares traded on that day the united states was already in a recession the following tuesday oct 29 1929 the dow jones industrial average fell 12 more in another mass sell off triggering the start of the great depression 6the great depression began in the united states but soon took hold throughout the industrialized world its economic impact was felt for more than a decade the era was characterized by catastrophic levels of unemployment poverty hunger and political unrest consumer spending and business investment dried up u s unemployment reached a level of just under 25 in 1933 and remained in the double digits until 1941 when it finally fell to 9 66 78during the great depression wages dropped 42 real estate prices declined 25 total u s economic output fell by 30 and many investors portfolios became worthless as stock prices cratered 9shortly after franklin d roosevelt was elected president in 1932 the federal deposit insurance corporation fdic was created to protect depositors bank accounts in the event of bank failure 10 in addition the securities and exchange commission sec was formed to regulate the u s stock markets 11