An economic depression suggests a very serious recession. A period of significant falls in output and negative economic depression.
A mild recession, with a small fall in GPD (of say 1%) wouldn’t be considered a depression by economists. Though in everyday use, people may refer to the economic downturn as a depression.
- A depression would be considered to be a deep and long lasting recession, with output falling for 12 months and falling by at least 2%.
A depression would involve:
- Very high levels of unemployment (In Great depression, unemployment often rose to 20% or more)
- Deflation. This involves a fall in the general price level and is very rare. But, when prices do fall it usually causes a big fall in spending.
Further reading on depressions
- Causes of great depression
- The great depression
- The great recession of 2010s v Great Depression of 1930s