Depression?
When does a recession become a depression?
Are we in a depression? While economists can’t even agree on a definition, the simple answer is no, not yet. A replay of the Great Depression looks far-fetched, thanks in part to the many safeguards in place–including deposit insurance, unemployment insurance and a certain willingness on the part of the authorities to print money. That’s the good news. The bad: This could be the start of a deep and long-lasting recession, a depression with a lowercase “d.”
By loose agreement, a recession shades into a depression when it stretches out for 36 months. We’ve got until January 2011 before we cross that line. By comparison, the Great Depression lasted from 1930 to 1941, just before the U.S. entered World War II. Two other depth readings when it comes to depression: a large drop in economic output–some put it at a 10% GDP drop over a year or so–and a rise in unemployment to more than 11%.
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