Knowra Economic depression Economic depression An economic depression is a prolonged, severe contraction in economic activity, marked by falling output, incomes, employment, and spending. It is deeper or longer-lasting than an ordinary recession.
Aggregate demand : The total planned spending on final goods and services in an economy at a given price level. Falling consumption, investment, government spending, or exports can deepen a depression by reducing total spending.
Great Depression : A worldwide economic crisis beginning in 1929 and lasting through much of the 1930s. It is the best-known modern example of a prolonged collapse in production, employment, and trade.
Recession : A significant decline in economic activity spread across an economy and lasting more than a brief period. A recession is generally shorter or less severe than a depression, though no universal cutoff separates them.
Unemployment : The condition of people without work who are available for work and actively seeking it. Depressions produce sustained job losses that damage household incomes and weaken demand further.
Gross domestic product : The monetary value of final goods and services produced within a country during a specified period. Sustained declines in real GDP are one sign of a broad contraction in production.
Debt deflation : A process in which falling prices raise the real burden of debt, prompting repayment and further declines in spending and prices. It explains how falling prices can intensify a downturn when households and firms carry heavy debts.
Long Depression : A prolonged period of economic stagnation and falling prices that began with the Panic of 1873. It illustrates an earlier downturn whose duration and severity remain matters of historical classification.
Stagflation : The coexistence of high inflation, weak economic growth, and elevated unemployment. Unlike a depression commonly associated with falling prices, stagflation combines stagnation with rising prices.
Banking crisis : A disruption in which banks face widespread failures, severe funding pressure, or loss of public confidence. Bank failures can both deepen a depression and reshape financial regulation afterward.
Unemployment rate : The share of the labor force that is unemployed and actively seeking work. Its sharp rise captures one of the most visible human costs of a depression.
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