I found this definition on line.
Question: What is a Depression?
Answer: A depression is a severe economic downturn that lasts several years. Fortunately, the U.S. economy has not experienced a depression since The Great Depression of 1929, which lasted ten years. The GDP growth rates were of a magnitude not seen since: - 1930 -8.6%
- 1931 -6.4%
- 1932 -13%
- 1933 -1.3%.
During the Depression, unemployment was 25% and wages (for those who still had jobs) fell 42%. Total U.S. economic output fell from $103 to $55 billion and world trade plummeted 65% as measured in dollars. The Depression was aggravated by poor monetary policy. Instead of pumping money into the economy, and increasing the money supply, the Fed allowed the money supply to fall 30%. The "New Deal" created many government programs to end the Depression, but government programs alone could not end it. Unemployment remained in the double-digits until 1941, when the U.S. entry into World War II created defense-related jobs.
We probably won't see a depression like that again, simply because the government has learned how to avoid it. Many laws and government agencies were put in place because of The Great Depression with the express purpose of preventing that type of cataclysmic economic pain.
We don't really know whether we will have a depression like the one in 1929 or not. It is too early to know. One thing is for sure and that is that there are a lot of similarities between those times and today. The depression of 1929 was proceeded by what was termed the "Roaring 20's." The government cannot fix this problem. Much of what is happening is the result of failed government policy. It didn't work in 1929 and it won't work today. Obama and Biden are already getting ready for a massive WPA or WPO program to create government jobs. This is the same type of jobs program developed during the 1929 depression.
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