What will happen during depression?

A prolonged, long-term slowdown in economic activity in one or more economies is referred to as an economic depression. It is a more severe economic downturn than a recession, which is a regular business cycle slowdown in economic activity.

Economic depressions are defined by their length, abnormally high unemployment, decreased credit availability (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, increased bankruptcies, including sovereign debt defaults, significantly reduced trade and commerce (especially international trade), and highly volatile relative currency value fl (often due to currency devaluations). Price deflation, financial crises, stock market crashes, and bank collapses are all prominent features of a depression that aren’t seen during a recession.

Terminology

The term “depression” is most commonly linked with the Great Depression of the 1930s, but it was first used much earlier. Indeed, President James Monroe referred to an early major American economic crisis, the Panic of 1819, as a “depression,”[6] and President Calvin Coolidge referred to the economic crisis immediately preceding the 1930s depression, the Depression of 1920–21, as a “depression.”

Financial crises were typically referred to as “panics” in the 19th and early 20th centuries, such as the “major” Panic of 1907 and the “minor” Panic of 1910–1911, however the 1929 crisis was more frequently referred to as “The Crash,” and the term “panic” has since fallen out of usage. The phrase “The Great Depression” had already been used to refer to the era 1873–96 (in the United Kingdom), or more narrowly 1873–79 (in the United States) at the time of the Great Depression (in the 1930s), which has subsequently been called the Long Depression.

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The 1934 book The Great Depression is credited with ‘formalizing’ the phrase,[6] though US president Herbert Hoover is widely credited with ‘popularizing’ the term/phrase,[6][7] informally referring to the downturn as a “depression,” with such uses as “Economic depression cannot be cured by legislative action or executive pronoun” (1931).

Occurrence

The classification of any era as a “depression” is difficult due to the lack of an agreed-upon definition and the significant negative overtones. Regional crises were commonly referred to as “depressions” from the early nineteenth century until the 1930s, as well as the more widespread crises of the 1870s and 1930s, but economic crises since 1945 have been referred to as “recessions,” with the global crisis of the 1970s referred to as “stagflation,” but not a depression. The 1870s and 1930s are the only two eras that are popularly referred to as “depressions” today. [8]

To some extent, this is merely a stylistic change, akin to the fall in the use of “panic” to refer to financial crises, but it also reflects the fact that the economic cycle has been more moderate since 1945 in the United States and most OECD countries (though not all).

Since 1945, there have been numerous periods of extended economic underperformance in specific countries/regions, as listed below, however labeling these as “depressions” is debatable. The 2008–2009 economic cycle, which included the most serious global crisis since the Great Depression, has been referred to as a depression on occasion,[8] but this phrase is not frequently used, and the event is instead referred to by other labels, such as the “Great Recession.”

Depressions of note

During the General Crisis, the world’s worst Great Depression ever occurred. The Ming Province of China went bankrupt, while the Stuart Monarchy was fighting civil war in Ireland, Scotland, and England on three fronts. Based on the pervasive misery in society at the time, English philosopher Thomas Hobbes developed the first known explanation of the need for a universal Social Contract in his 1652 book Leviathan.

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