What is economic depression?

An economic depression is a period of sharp and sustained decline in economic activity that typically includes negative gross domestic product growth and a substantial rise in unemployment, poverty and homelessness. During economic depressions, the stock market drops significantly, and there is a large uptick in personal and business bankruptcies.

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.

Does the US have an economic depression?

The U.S. hasn't experienced an economic depression since the 1930s. Economists and government officials learned from the Great Depression, and the government now employs several key defensive strategies to prevent recessions from transitioning to depressions.