What Is A Depression And Are We In One?

Yes, we’re saying the “D” word. Now that we’ve officially entered a recession — it’s time to wonder if we’re in a depression. We’d love to be able to give you a yes or no answer, but according to Marketplace’s personal finance guy, Chris Farrell, nobody agrees about what makes a depression different from a recession.

Ferrell found a bunch of definitions:

Richard Posner, the federal judge and University of Chicago scholar, recently said he believes we are in one: “I suspect that we have entered a depression. There is no widely agreed definition of the word, but I would define it as a steep reduction in output that causes or threatens to cause deflation and creates widespread public anxiety and a sense of crisis.”

Yikes. Here’s another definition, this one from Nobel laureate Ed Prescott and economist Timothy Kehoe, who “defined a great depression as a sustained drop of 20% or more in the economy,” Ferrell says.

Still another definition used the unemployment rate as a way to determine a depression from a recession — an unemployment rate of 12% or a period of three years in which the rate is over 10% would qualify.

What do you think? Are we in a depression?


What’s a depression? [Marketplace]
(Photo:kimberlyfaye)

Comments

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  1. Yuppers: I love you says:

    I’ve heard this somewhere before:

    A recession is when your neighbor loses their job.
    A depression is when you lose your job.

    • Yuppers: I love you says:

      @j0sh: Oh yeah…the last part:
      A recovery is when your congressman loses their job! ;)

    • MyPetFly says:

      @j0sh:

      What is it if you lose 20% of your job? (Like me! Like me!)

    • hoosier45678 says:

      @j0sh: Off by one….

      A slowdown is when your neighbor loses their job.

      A recession is when you lose your job.

      A depression is when an economist loses their job.

    • Colage says:

      @j0sh: I can’t help but wonder if consumer confidence would be better off if there weren’t so many damn “What do you people who don’t have any business making any sort of judgment here think after hearing this sky-is-falling quote?” polls that get passed off as some sort of scientific fact.

  2. downwithmonstercable says:

    No. We’re not lining up at the docks yet.

  3. Gokuhouse says:

    Okay, everyone post….

    Have you lost your job?

    NO

    • downwithmonstercable says:

      @Gokuhouse: No, but there will be 10,000 reductions this year, with the first 4,500 in February.

    • rugman11 says:

      @Gokuhouse: No, and I am about to be offered another contract to be kept on through the Summer of 2010.

    • ilovemom says:

      @Gokuhouse: People with no jobs have better things to do than read the internets.

    • battra92 says:

      @Gokuhouse: Nope.

      I have friends who have lost jobs but honestly they were unskilled or clerical work.

    • TWSS says:

      @Gokuhouse: Not yet, but 18% of my company was laid off a few weeks ago, and that included Java developers and DBAs as well as the sales and customer service people who always seem to be the first cut at times like these.

      They’ve also frozen salaries, although our business unit got a 6% bonus because we rock.

    • artieb says:

      @Gokuhouse: No, I have not lost my job. The company did say in the summer that they foresaw a “reduction” of 1% happening soon. I heard there were layoffs in some of our slower areas of the country (transportation design industry) and it seems that the 1% is the magic number for now. I do have some savings to fall back on if I do get laid off.

    • HogwartsAlum says:

      @Gokuhouse:

      No but we are being bought. I’m worried because every time I have tried to put something aside, my old car ate it up.

    • White Speed Receiver says:

      @Gokuhouse: Yes. I lost my job in November. Fortuately, I was able to get a new job almost immediately and take a few days off for mental health.

    • Parapraxis says:

      @Gokuhouse:

      is it “losing” if you recently won the lottery and lost all interest in working?

    • Cat_In_A_Hat says:

      @Gokuhouse: Nope, actually just got a raise!!!

    • Eyebrows McGee (now with double the baby!) says:

      @Gokuhouse: No, but apparently there were surprise early layoffs at a big Caterpillar plant in town today, which may or may not have involved “rioting.” (Early news reports are sketchy.) Early reports say like the whole third shift was surprise laid-off and escorted out by security.

      THAT makes me feel like we’re … maybe not in a depression, but in a downturn that’s getting ugly and is going to hurt a helluva lot more than a “mere” recession.

      And I’m in a part of the country where the economy has remained *fairly* robust, at least by comparison.

    • Mary Marsala with Fries says:

      @Gokuhouse: No, but I work in a small family business; I’d be the last person to get fired.

      Living in SE Michigan, I sometimes feel like I’m the ONLY person who hasn’t lost their job!

    • Burgandy says:

      @Gokuhouse: I didn’t, but our team shrunk from 11 to 7 on the 15th. And we are all but stealing each others work to look the most productive.

    • gStein_*|bringing starpipe back|* says:

      @Gokuhouse: NO, but i’m also in an entry level position where we have a high turnover rate (i think we’ve replaced 90% of our staff since i started working there in september)

    • Chris Yantis says:

      @Gokuhouse: Unfortunately my worst nightmare became a reality last week, I was laid off with several other employees at a job where most of us are going to school paid for by ourselves out of our own pockets. Now I may have to move back home and go through an ugly credit transfer process.

      I never thought it would happen to me, but when it does you have no words for it, just a huge blank for a few minutes, then panic. It is going to be hard going back to minimum wage for a while…

    • JamieSueAustin says:

      @Gokuhouse: Yes.

    • quizmasterchris says:

      @Gokuhouse: LOSE?! Ha!

      Over the past 3 years I haven’t been able to GET a full time job. I’ve applied to literally 1,000. Several interviews, most of those the organizations never hired anyone.

      I’ve been working one or two part-time crap jobs and/or selling things on the internet for the past 3 years. Nothing with stability.

      Note that I’m no longer counted as “unemployed” – I’m “discouraged!”

  4. MyPetFly says:

    Interestingly (or not) I just looked up the official definitions yesterday for “recession” and “depression” (and as noted, there’s no official agreement on the latter). Judging from what I read, and I’m not an economist, I think we’re in a very deep recession and likely on our way to a depression.

    I don’t remember specifically what it was, but there’s one aspect of a typical recession that we haven’t met, and there are several aspects of a depression that we have met.

    If we do end up in what can be agreed upon as a depression, I don’t think it will be as deep as the one in the 30s. That one was accompanied by the Dust Bowl, which we may not experience. But then again, with global warming, who can tell for sure?

    • Barney_The Plug_ Frank says:

      @MyPetFly: If you believe in that global warming bull shit–its not like our climate has fluctuated through out recorded time ! The main reason for my disbelief, is for the simple reason that liberals are pushing the idea of man induced global warming–and liberals are good at lying. Otherwise, what you say makes sense.

  5. rachmaninov1 says:

    I think Brad DeLong’s rule of thumb, noted in the article, makes complete sense: A depression is when the unemployment rate breaches 12%, or stays above 10% for three years.

    • Fineous K. Douchenstein says:

      @rachmaninov1: Percentages are misleading in a way, considering the difference in population. Think of how many jobs really exist, even with a 10% unemployment rate.

      • floraposte says:

        @wagenejm: Except it correlates to the considerably greater number of jobs lost, so it’s not really misleading at all.

      • Illiterati says:

        @wagenejm: My county reached 10.1% in December. Not many jobs here and definitely depressing. The spouse got laid off in December, so he feels like he’s finally part of the popular club. Funny man in poor-ass times.

    • bishophicks says:

      @rachmaninov1:

      But they keep changing how the unemployment rate is calculated. Currently it’s 7.2%, but if you used the methodology from the 80′s you’d get a different number. If you used the methodology from the 30′s the number would be more like 12%.

  6. ElizabethD says:

    I dunno, but I sure feel depressed. 8(

  7. nicemarmot617 says:

    What if your coworkers lose their jobs and you get stuck with all the extra work and feel like you’re about to have a heart attack from the stress?

  8. Anthony Ellsworth says:

    I was going to say no till my boss just called me in to his office and laid me off. So yes we are in one.

  9. MostlyHarmless says:

    I like how the vote is split 50-50.

  10. rugman11 says:

    There are several different ways to define a depression, so let’s look at a few. GDP growth:

    1930 – -8.6%
    1931 – -6.4%
    1932 – -13%
    1933 – -1.3%
    2008 – +1.3%
    4Q 2008 – -3.8%

    So we haven’t had an entire year of negative GDP growth yet and would have to double our 4th quarter growth (in the wrong direction) to equal the contraction seen in 1930.

    During the Great Depression unemployment was as high as 25%. We’re sitting at around 7.5%. During the Great Depression wages fell (for those who still had jobs) 42%. In 4Q 2008, the median wage was UP 4% over 2007.

    In other words, the economy would have to get twice as bad as it is now in order to reach 1930 levels. I’m not sure if that will happen or not. But as for now: No, we are not in a depression.

    • Anonymous says:

      @rugman11: Unfortunately, the government has moved the benchmarks on how it calculates GDP and unemployment since then. Most likely, the current figures are quite understated.

    • Canino says:

      @rugman11: If the early 80s wasn’t a depression, this certainly isn’t one either.

    • EBounding says:

      @rugman11: The 3.8% drop is the annualized number. GDP output only dropped by 1% from the 3Q.

      [www.cato-at-liberty.org]

    • Eyebrows McGee (now with double the baby!) says:

      @rugman11: On the other hand, the economy in the 1930s was radically structurally different than it is today. More than 30% of the US workforce was still in small family farming going into the Great Depression. I’m not an economist or a historian, but it seems obvious that there were a lot of implications of THAT that are not in play here — farmers are typically able to support their families even if not producing crops for cash, for example (IIRC, around 1930 an American farmer could feed his family and around 14 other people). Even many urban workers in the Great Depression had family farms to go home to if worst came to worst. Today very few non-agricultural workers have a family-farm option (and even very few agricultural workers).

      Because farming today is mostly “factory farming” rather than diversified “family farming,” the economic impacts on and from the agricultural sector are going to be very different, and the price of food is going to move differently.

      Finally, problematic climate conditions and crop failures work differently in a modern agricultural economy than they did in the 1930s, due both to changes in agricultural practice and transportation, and due to changes in government policy that creates different incentives than it did back then.

      In other sectors, the 1930s economy was heavily manufacturing-oriented. Today, I believe a majority of US workers are in service and knowledge positions, which will be affected radically differently than they were in the 1930s.

      All of which is to say, the numbers might not need to match 1930s numbers for things to fucking suck at a Great Depression level. On the flip side, the economy might be better able to absorb 1930s-style blows than it was in the 1930s. I don’t know. But I do know the economy today is SO radically different that comparing it to the 1930s and looking for similarities in how the *economy* will respond is not as useful as people seem to be pretending it is. Learning from the history of it is one thing, but pretending this is “another 1930″ seems counterproductive.

    • Anonymous says:

      real unemployment (not the 7%) or whatever number they are using is actually closer to 15%. and the cato institute is funded by many of the companies that got the country into this mess, so I take any number they say with a huge grain of salt.

    • bishophicks says:

      @rugman11: We’re only a few months past the Lehman Brother’s collapse that triggered the credit crises and subsequent panic. There is more to come. I’m sure things still looked pretty okay in March of 1930.

  11. Covert7 says:

    Nah, not quite yet.

  12. thesadtomato says:

    Gallup.com has a lot of good polls that indicate the mood of the country, including a graph that indicates how many people are hiring versus reducing/letting go. One poll I liked was “Did you worry about money yesterday?” 60% did not worry.

  13. Razorgirl says:

    I think that once you start seeing multiple cases of suicides and murder/suicides that can be directly attributed to the economy and job market it is time to agree that if the accepted definition of a ‘Depression’doesn’t fit, the definition may need to be revised.

    • RochamBeaux says:

      @Razorgirl: We just need to get the economy set up with a supply of Prozac! and as for the people it might just be Darwinian population control, but then “I still have a job” and that is my mantra in the morning thanks to my wife.

    • Barney_The Plug_ Frank says:

      @Razorgirl: The definition needs to be consistent with historical facts. Lets not redefine a ‘Depression’ for the sake of scaring people. Look at today’s numbers and compare to historical facts and call it for what it is–not just go off and redefine everything to suit current hysteria. Sober level headed people are what’s needed.

    • snowburnt says:

      @Razorgirl: I would say people are depressed, still I’d agree we’re no where near a depression. Employment is worse than recent memory, but still not cataclysmic.

      It’s not hard to figure out what happened either. A bubble burst…a HUGE bubble. It shook the foundations of the banking system. Once we get banks loaning again things will start to turn around. After they start loaning I feel like we’ll have to raise interest rates significantly for a few years for people to start investing and we’ll be right back where we started: watching a new bubble grow.

  14. rpm773 says:

    Whatever we’re in, at least we can legally consume alcohol this time around.

    4:15 on Friday. Time for some scotch.

  15. GretaDandradeine says:

    *sighs* i dunno…but sure sounds depressin…

  16. TrueBlue63 says:

    Because of modern monetary policy (which was a reaction to the Great Depression), we pretty much can’t have a depression like that again. The problem is that we now have something that is potentially worse. Its called Stagflation.

    Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked. You end up with higher prices, the same salary and diminishing job security.

  17. Ryan Kennedy says:

    BTW – great photo for this post. For those of you not from New Jersey (which I hope is most of you), that is a sculpture featured at the Grounds for Sculpture in Hamilton NJ. “Bread line” I believe is the name.

    It’s quite moving in person.

  18. mbz32190 says:

    We’re not in one yet, but we’re getting close. It’s not even a U.S. problem anymore–the whole world is going down with us.

  19. frodolives35 says:

    Times are getting tough. My wife and her coworkers have taken a 16.75% pay cut (the ones not layed off) and I am working 36 hrs vs 40 hrs. I have a few children who can’t find jobs with college degrees. I think things will get alot worse before they get better. Does any one know if they calculated the unemployment rate the same in the 30s. There are alot of people who have fallen off the unemployment rolls who are still unemployed and they don’t count in the figures. The county I live in has a 10% rate but its really about 30% if you count everyone who wants to work.

    • Eyebrows McGee (now with double the baby!) says:

      @frodolives35: “Does any one know if they calculated the unemployment rate the same in the 30s. There are alot of people who have fallen off the unemployment rolls who are still unemployed and they don’t count in the figures.”

      I am curious about this as well. In the 30s, 30% of Americans were on family farms. Did those farmers count, if they were seeking work off the farm? What about an 18-year-old farm son seeking work but working on the farm in the meantime? I know today it’s very muddied by the “seeking work” criteria — housewives who are staying home for now because there are no jobs and child care is spendy and so they aren’t ACTIVELY seeking work don’t count, and underemployment doesn’t count.

    • Anonymous says:

      @frodolives35:
      I read an article (sorry, don’t remember where) that said if the unemployment rate was still calculated today the way it was during the great depression, our current rate would actually be more like 16%. But no, the rate is not calculated the same way anymore.

  20. kyle4 says:

    It may be a depression, but people who compare it to the “Great Depression” either a) didn’t live through that or b) don’t know what they’re talking about. The minute we don’t have the internet (which alone makes it better then that time) and have no welfare, forced to work on the streets for food stamps and camping out at soup kitchens, then I’ll believe it.

  21. puyro {who was banned for "junk comments" what? says:

    Did I lose my job?

    Yes.

  22. Tedicles says:

    For what it is worth…this is a good/funny related story:
    A man lived by the side of the road and sold hot dogs. He was hard of hearing, so he had no radio. He had trouble with his eyes, so he had no newspaper. But he sold good hot dogs.

    He put up a sign on the highway telling how good they were. He stood by the side of the road and yelled, ‘Buy a hot dog, mister.’ And people bought. He increased his meat and bun order, and he bought a bigger stove to take care of his trade. He got his son home from college to help him. But then something happened.

    His son said, ‘Father, haven’t you been listening to the radio? There’s a big depression on, the international situation is terrible, and the domestic situation is even worse.’ Whereupon the father thought, ‘Well, my son has been to college. He listens to the radio and he reads the papers, so he ought to know.’

    So the father cut down on the bun order, took down his advertising signs, and no longer bothered to stand on the side of the highway to sell hot dogs.

    His hot dog sales fell almost overnight. ‘You were right, son,’ said the father to the boy, ‘We are certainly in the middle of a great depression!’

    • TPS Reporter says:

      @Tedicles: You know, that is absolutely true though. I read somewhere a couple of weeks ago where they did an online poll and asked “If you didn’t know anything about what was going on, layoffs, credit crunch etc., would you cut back on your spending?” The majority answered no. The real economic reality is by not continuing our purchases, and I don’t mean the plasma TV, I mean everyday items that are being cut down on, then we really make the problem continue. I stock bread at a local grocery store as a PT job. We have seen a decrease in the amount of bread people are buying, even the stuff on sale. Bread is considered a staple, not really a “luxury”. But sales are down. Not all this is my reply to Tedicles post, but I had this to say also so I included it.

  23. Ozyman666 says:

    Not yet, but fortunately, I’m in an industry on solid footing (newspapers).

    /sarcasm off

  24. m1ek says:

    Those whose only metric is The Great Depression are ignoring the reason it has that name in the first place: there were other depressions before that weren’t as Great, so, no, you don’t need to hit 25% unemployment or a 13% drop in GDP for it to be a depression.

  25. Xay says:

    @Gokuhouse: No, but several of my coworkers have.

  26. cubejockey says:

    January’s unemployment was 7.2%

    February figures come out on the 6th

  27. Hodo says:

    The best definition I’ve come across (and I come across a LOT of them in my line of work as an analyst) is that a recession is a natural part of the business cycle, and if left alone, will self correct and at some point, will become expansion. A depression, is something else entirely. Depressions are self-feeding (recursive) and are not self-correcting. Depressions require intervention of some sort, some external stimulus, to break the cycle.

    Unfortunately, this is largely a qualitative measure, and more often than not, can only be seen retroactively.

    • HRHKingFridayXX says:

      @Hodo: This is what I worry about most- thanks for pointing it out! We have an imbalance in our workforce, too many people without information or physical labor skills, i.e. “service” workers. Also, a lot of people are realizing they could go a few years without buying non-essential goods, which is a big reverse in the amount of manufacturing need.

  28. kwsventures says:

    During the “Great” Depression, unemployment was 25% to 30%. We aren’t close to that, yet. But, keep on writing those gloom and doom stories that get it into the public’s mind that everything is bad. Write and talk this economy into the dirt. Gee, thanks.

  29. Daniel Kubik says:

    I see a lot of nonsense about GDP and unemployment and growth and whatnot; all of this in complete disregard to the fact that this recession/depression/whatever was largely precipitated by faulty statistical models. If we are truly in worldwide depression, then it means the economy has failed, and economic instruments alone will not be sufficient to revive it.

    The Great Depression of the 1930s and similar localized events are associated with exceptional cynicism in government and a lapse or collapse in the cohesion of civil society. Stability was only restored with massive overhauls in both social and economic institutions: nationalization of industry, the invention and expansion of the welfare state, and a general abandonment of the principals of laissez-faire economics.

    Formulating statistical definitions of a depression suggests that it is merely a prolonged recession. During Roosevelt’s first inauguration, machine gun nests were installed on the White House lawn to ensure the President’s security. Don’t think an a depression is something you can quantify.

  30. __Ken__ says:

    I’m deperssed – does that count?

  31. Mike says:

    I just looked it up on Princeton’s dictionary.

    Looks like we might just be in a depression according to them.

    [wordnetweb.princeton.edu]

  32. mushroom104 says:

    Not yet, but it seems rather likely that I will lose my job very soon. I work for a landscape architecture company that works mostly on subdivisions. Work has almost completely dried up. We’ve all been cut back to 30 hours. All of us that are left that is. We’ve gone from a company of 25 to 11 in the course of a year. We aren’t getting much new work and the developers aren’t paying us for work we’ve already performed. If we don’t start getting some work soon we won’t be able to hang on much longer.

  33. pschroeter says:

    The correct answer is “no, but if something doesn’t improve soon, we will be.”

  34. humphrmi says:

    A Recession is when we fall down.

    A Depression is when we can’t get back up.

    It’s all a matter of “how long”.

    We won’t know if we are in a depression until it ends.

  35. varro says:

    I’m thinking we *are* in one, and not because of my political beliefs. (Judge Posner, the dean of the conservative Law and Economics school of legal thought, believes we are in one…)

    We don’t have deflation or hyperinflation, but we do have rapidly increasing rates of unemployment, tight credit markets, gluts of manufactured products (cars, especially), gluts in the housing market due to foreclosures and inability to sell houses because of tight credit.

    I will be convinced that we’re in the Fourth Depression (after the Panic of 1837 – caused by numerous bank failures, the Long Depression of 1873-1896, and the Great Depression) if the GDP sinks on current levels for 2 or 3 more quarters or unemployment reaches 10% for at least a quarter.

  36. rickinsthelens says:

    If we consider the time from about 78-83 a depression, than we may be entering one. If we do not, we are not. Our national unemployment rate is still under 10%, our economy is weak, but has not collapsed. Most people still live in a decent home, despite foreclosures. Times are tough, not catastrophic. If kids still go to college, and we still are more worried about Miley Cyrus’s clothing than we are the hordes of unemployed men filling our streets (which they are not), we are not in a depression. We just have such a poor grasp of history that we don’t understand the term.

  37. Anonymous says:

    The media today is under great pressure to “call” everything before it happens. Networks compete to call the winner of an election, or a nomination, or any event of mass interest/hysteria, ideally before it happens. The network that gets the scoop, or call it first, supposedly gets more viewers and hense commands better advertising dollars.

    So it doesn’t matter if we are or aren’t in a “depression”. It’s just a term we used to describe the massive sweeping poverty that affected the whole country in the 30s. Obviously, we aren’t there yet. Lines at Costco are still long and freeways still get jammed at rush hour, so people are obviously working and have money. The day you go to the store and it’s just you and the cashier and no food on the shelves, and at the gas station there’s no other cars, or the station has a sign that says “OUT OF GAS UNTIL FURTHER NOTICE”, or you hit the freeway and yours is the only car on the road virtually beside the occasional patrol car, THAT’S A DEPRESSION. That’s what our grandparents went thru, and we aren’t anywhere near that yet, thank God.

  38. Repique says:

    I think we’re going to have a hard time with this because the Great Depression wasn’t just an economic depression. When people think back to the days of saving tinfoil and scraps of twine as the requirement for a depression, then we’re not likely to get there. The Great Depression, however, was economic factors combined with the Dust Bowl (which was itself a man-made eco-catastrophe, not a natural disaster), severe social inequalities, post-war fragility, etc.

    What could make this one of *those* would be a collapse of fossil fuel supplies, for example. The two significant depressionary periods in the US have both followed major wars–the Civil War and WWI–which dwarf in impact Iraq and Afghanistan. (Not that I consider Iraq and Afghanistan insignificant, but the Civil war killed over half a million Americans.) Short of natural disaster (or unnatural equivalent), I think that we’re not going to be seeing any Hoovervilles anytime soon.

    But that doesn’t mean we’re safe from a depression, it just means that it’s not going to be the same sort of thing our grandparents would have associated with that word.

  39. DaoKaioshin says:

    technically it would be an obamaville now

  40. Marshfield says:

    I lived through the Carter years. Come talk to me when unemployement is higher and inflation pushes interest rates to 15%.

    At the rate we’re going, “borrowing” and printing money, it may not take too long.

  41. nygenxer says:

    It is a depression, and it is going to make the last one look like a walk through the park.

    There is an estimated $600 trillion worth of leveraged derivatives out there, or 12 years worth of the entire world’s COMBINED gdp (put another way, that’s every cent made by every worker in every country for over a decade). That does not include our federal deficit, more than doubled during Dumbya’s reign, nor the estimated $55 trillion of future promises to the retiring baby boomers.

    The unemployment rate at the height of the last depression was 25%. If we were to measure unemployment using the same definitions and methodologies, the unemployment rate was around 14% a couple of months ago. And if you haven’t noticed, a lot more people have been laid off since then.

    Ever seen a video of an avalanche? First the slightest movements on the edge, then sections start to slide, then the whole fucking mountain comes down? We’re just entering the second stage.

    I’m sorry, but the collapse is inevitable at this point. It can be slowed, but it has to happen. The numbers demand it.

    For anyone interested in understanding the situation fully, read up on the economic policies of the last 40 years and you’ll see how all the graphs point to this eventuality. (This scenario has been repeatedly predicted by economic scholars for years but no one like depressing news. And remember what Einstein said about the universe and human stupidity?)

    You can only borrow for so long until money has to be repaid. Our fractional monetary policy, along with the world’s largest intentional debt engine of the privately owned “federal” reserve corporation (no more “federal” than Federal Express), well, these adjustments are eventualities built into the system for a reason: consolidation of power.

    The world’s monetary system will have to be rebooted, and unfortunately I don’t believe that will be done peacefully.

  42. worksanddays says:

    @DaoKaioshin Actually, it would be “Bushville” now, not Obamaville. The term “Hooverville” was based on the president who was in power during the lead up to the depression and the Wall Street crash in 1929, not the president who came in power in the middle (1933) and tried to fix it. Regardless of your political views and whether you think Republicans, Democrats, or both are to blame for this situation, it definitely cannot be blamed on Obama!

    From Wikipedia: “A Hooverville was the popular name for a shanty town built by homeless men during the Great Depression. They were named after the President at the time, Herbert Hoover, because he allegedly let the nation slide into depression.”

    By this definition, Bushville would be the correct term, if we were going to use a president’s name. However, if shanty towns or homeless camps start springing up around the country, I think a more appropriate name would be “Wallstreetville” or “Subprimeville” or “Greenspanville”.

    • JamieSueAustin says:

      @worksanddays: I think I like the term “Wall Street Villa”. Gives poverty a more glamorous (and therefore more marketable) feel.

    • jstonemo says:

      @worksanddays: How about Schumerville or Frankville. You know, just a few of the guys in Congress who hands were elbow deep in Freddie and Fannie and other institutions that have since fallen apart.

      Barney Frank – the queen of sub-prime.

  43. ceez says:

    today they let go 7 people in my office….I am in a depressive state…even though it wasnt me

  44. chauncy that billups says:

    We are in no way, shape, or form, in a Depression. With such boondoggles as this “Stimulus” Debt/Spend bill being shoved down our throats, we very well may get there. But we’re not there yet. GDP GREW last year. The economy contracted 6.4% in 1982. Remember the Depression of 1982? No? Well then, there’s your answer.

  45. darthsodomizer says:

    “Gokuhouse:
    Okay, everyone post…. Have you lost your job? NO”

    I have lost my job, my brother has lost his job, my mother has lost her job, my neighbor has lost his job and I still don’t think it is a depression.

  46. RockLobsterNet says:

    The Economist had a good article on this a few weeks ago, Even economists sometime disagree on what exactly the difference is, but this guy has a very solid view in my opinion:
    “But a recent analysis by Saul Eslake, chief economist at ANZ bank, concludes that the difference between a recession and a depression is more than simply one of size or duration. The cause of the downturn also matters. A standard recession usually follows a period of tight monetary policy, but a depression is the result of a bursting asset and credit bubble, a contraction in credit, and a decline in the general price level. In the Great Depression average prices in America fell by one-quarter, and nominal GDP ended up shrinking by almost half. America’s worst recessions before the second world war were all associated with financial panics and falling prices: in both 1893-94 and 1907-08 real GDP declined by almost 10%; in 1919-21, it fell by 13%.”

    Here’s the full article: [www.economist.com]

  47. CaptZ says:

    @varro: gluts of manufactured products (cars, especially)

    I work for a supplier for GM’s SUV plant. We are working overtime today (SAT),to makeup for the 421 SUV’s that were not made due to the ice storms here in Texas last Wednesday. OVERTIME! Believe it or not, SUV sales are actually beating car sales. Does that show you how ignorant people are for buying gas guzzlers? Or ho smart people are because you can get a $60k vehicle for $40k?

    Depression? Nope….not yet. But I do think things are going to get worse and a majority of people arent prepared. I have alrady tightened my belt. I have cut all discretionary spending by at least half if not more and stuffing the saving in the bank. Never seen my acct grow so fast….ever.

  48. INsano says:

    I was laid off by my boss in November to save his job. They fired him on Wednesday. Now they want to hire me to take his place. Roundabout way of getting a promtion. As frustrating as that job was, for the last 3 months I worked there, I stopped looking at it petulantly and started just being glad I had a job with health care. If I can get a job again I’ll hold it–even if it’s not perfect, it’s going to be bleak for at least a few years. The employment downtrend is only accelerating, as we have seen in the last few weeks of laboricide(did I coin a word?). That means that the negative effects of those recent layoffs won’t really even be felt for months, which will feed more.

    Hold onto your hats.

  49. memphis9 says:

    It’s a Depression, and will be such a drastic change for so many that we will find ourselves in very dangerous times, socially and politically. Kinda makes consumer issues trivial and piddly.

    The one think that seems certain to me, although certainly not to politicians, is that we can’t spend and borrow our way out. Saving, frugality, “less stuff” is kind of anti-consumerist, but we are using up the earth’s resources fast enough than we are already SOL for many generations, for some stuff. (Yes, oil soon, but…who would have thought you could run out of HELIUM, of all things?)

    Probably a little Amish for most of us, and it’s not exactly like I’m living on some commune in a Yurt, but not screwing the next generation to the wall perforce of our mega consuming “ruggled individualist” free-market mentality, may require a little rethinking of that whole “What ***I*** want is the ultimate freedom” thing.

  50. pax says:

    I haven’t lost my job, nor has my husband, but his boss and two of his co-workers have been laid off in the past month. He works in IT.

  51. PLATTWORX says:

    The media must be VERY careful. Consumer spending an confidence are a MAJOR driver of the economy. Yes, we are in a recession and a deeper than normal one.

    However for the major media outlet on TV, the web and in print to keep running “Is the end coming?” and “How bad can it get?” stories over and over and over is simply ADDING to the stress and worry people are feeling and when they happens, they FURTHER cut back on spending which can actually cause the depression/nasty long recession the press loves chatting about the possibility of. REMAIN CALM!

  52. calstudios says:

    Old, tiny houses in coastal California cities are still selling for $800,000. No recession or depression here.

  53. Richard Monihan says:

    We’re nowhere NEAR a Depression and while definitions vary, it’s pretty clear what WE ARE IN is a “falsely described” set of variables. Falsely described, of course, by journalists who are choosing to impart their view of the economic situations upon a less than understanding public.
    This is a public which is unfamiliar with a recession. A public that hasn’t seen a real recession in about 20 year or so. Our recessions in the last 28 years have gotten progressively weaker and less hurtful. When we suddenly have one, we freak out and scream! And the journalists jump on the bandwagon.

    A Depression is a set of circumstances that do several things:
    1. Depress (hence Depression as a term of description) the Gross Domestic Product
    2. Depress Employment significantly – increasing unemployment by 100% in a period of a year or so.
    3. Depress prices to the point of deflation.

    Have we had ANY of these things? No. Unemployment is up, but only by about 40% in the last year.
    GDP has not shrunk yet, on an annualized basis, but did shrink in 4th Quarter.
    Prices have not deflated, but are holding steady in relative terms.

    There is a final aspect of Depression that isn’t well quantified, but does play a role – the lack of access to ready cash. That is, the restriction of lending and inability to gain capital.

    This has clearly NOT happened, but people will argue it has because relatively speaking, it SEEMS like it has. But lending standards were so easy, and capital investment so risky, that we were living in a falsely pumped up situation. Current lending and capital investment standards are what most economic historians would call “normal”. That is, what we’d see in a relatively healthy economy. The only difference is that the economy is recovering from the shock of easy money…so it’s not providing the push that would be expected.

    Ease up, guys…things are NOT that bad, and the economy is incredibly resilient.

  54. MerleJibran says:

    It seems as if news outlets are missing a HUGE part of this “unemployment” crisis. It is FAR worse than the numbers suggest…by a LOT. The percentages are only based on unemployment pay CLAIMS. What about all of the people that had to take some time off from the workplace (went back to school, etc) and now cannot find jobs AT ALL. Perhaps they have SOME income from a spouse, but unemployed nonetheless. I’d venture to guess THAT percentage is even greater than the criteria used generally.
    Where’s THAT article or acknowledgement?

  55. shmianco says:

    i’ve not lost my job…yet. i have however been offered a new job 2 months from now, which gives me a safety net from the looming termination! lucky i’d consider that.

  56. Stile4aly says:

    There is no difference between a recession and a depression. Both are simply 2 quarters of negative economic growth. We’re currently into quarter 5 or 6 (depending on who you listen to) of negative economic growth. The only reason we haven’t called past recessions “depressions” is to avoid the psychological attachment to the Great Depression. Incidentally, we had begun to move away from calling it a recession and towards the even more milquetoast term “market correction.”

  57. Snarkysnake says:

    Recession- When the economy corrects ITSELF (and returns to growth) after all of the weak ,speculative business plans have been liquidated and that capital is put to more productive use in profitable ,efficient businesses.

    Depression- The economy has no ability to correct itself without some massive,disruptive, stimulative event that restores buying and more importantly,pricing,power. (Like when the Japanese wanted to conquer the world without even producing a snappy,well built car)

  58. chandler in lasvegas says:

    Does anybody remember when Reagan fiddled with the unemployment numbers and came up with a New N Improved way to calculate the unemployed? Presto chango he reduced unemployment by a few % points.

    I wonder what the old figure would calculate today. Over 12%?