What is an economic depression?

An economic depression is a rolling disaster that begins with a decline in consumer confidence. There is, of course, a triggering event or events behind this loss of confidence. The subprime mortgage crisis of 2006 is seen as the first major event leading to the Great Recession of 2007-2009.

What is a depression?

There is no absolutely agreed definition to a depression. But I would define a depression as A deep and long-lasting period of negative economic growth, with output falling for at least 12 months and GDP falling by over 10%.

How does a depression affect the economy?

Depressions cause severe financial damage, including stock market downturns, job losses, corporate and personal bankruptcies and even potential destabilization of the entire financial system. In the long term, a depression can cost an entire generation of people economic opportunities and hinder their education and economic mobility.