Definition of Economic Depression

There is no single clear way to define an economic depression. It is basically a very severe form of recession. Two common ways would involve:

* A fall in GDP of 10% or more.
* A fall in GDP for over 3 years.
Other features of depression

• Very high unemployment – over 20%
• Deflation
• Asset / credit contraction

More on definition of depression

Before the Great Depression, every downturn was called a depression. The word recession was used to avoid reviving memories of the Great Depression.

In 1978, one of Jimmy Carter’s economic advisers Alfred Khan was referring to the US facing a depression. Jimmy Carter said he didn’t like the term depression, because it created negative connotations. So Alfred Khan noted:

“We’re in danger of having the worst banana in 45 years.”

from: Economist