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Are we now in a depression?
A tourist takes a picture near life-size bronze statues depicting men standing in a line during the Great Depression at the Franklin Delano Roosevelt Memorial in Washington, D.C.
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KAI RYSSDAL: You know, it wasn't all that long ago that we were arguing over whether the economy was in a recession. That debate ended at the beginning of December.
But this morning, the head of the International Monetary Fund gave some people a start. He said the world's advanced economies are already in a depression.
We asked Marketplace's Dan Grech to find out, a) If that's true; and b) If it is, what does it mean?
DAN GRECH: If you ask economists whether we're in a depression, most will answer like Mark Zandi at Moody's Economy.com.
MARK ZANDI: No. At least not yet.
But once in a while you'll come across an economist who says this:
PETER MORICI: Yes, we're in a depression. We're not in a normal business cycle. The economy will not easily recover from the slump that it's in.
That's Peter Morici, a business professor at the University of Maryland. He first said we're in a depression back in December.
PETER MORICI: We're in a prolonged and sustained contraction in economic activity. The economy is shifting down and not coming back. That cannot be fixed, even with a lot more government spending.
Most other economists, like Mark Zandi, say it's just too soon to call this downturn a depression.
ZANDI: Well, a depression has to be extraordinarily severe, so at least double-digit unemployment. It has to be very broad-based, across all industries, occupations, regions of the country. We're getting close to that. But also very long.
At least five years, he says.
Economists have no established definition of a depression. The Bureau of Economic Research, the group that officially declares recessions, doesn't even use the term. Beyond the plain figures, however, there's another factor at play.
Again, Mark Zandi.
ZANDI: Sentiment is a key part of a downturn. I think you go from a bad economy to a recession because people lose confidence. And you probably go from a recession to a depression because people lose complete faith.
Zandi says he hopes recent government initiatives like the bank bailout and the economic stimulus package will help restore some faith.
I'm Dan Grech for Marketplace.
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A depression is defined as three consecutive quarters of economic downturn coupled with a 10% or greater unemployment rate. The fact is that the USA is the "New Rome" and all of what we see now amounts to the implementation of a global government; In order to do that the USA must be destroyed and what better method is there than financial destruction. Homeless, starving and unemployed people have no means or resources to defend the Constitution and so the enemies of freedom have decided to divide and conquer. The world’s governments are being converted into socialism and communism. When you send all of your production to China and trade with communist and socialist nations, the reality is that this "New Rome" will fall completely. Sorry but we have all been had!
Hmmm. Let's see . . . double-digit unemployment equals depression. Yep. We're definitely in a depression with the Great Depression looming. Special thanks to Alan Greenspan, Reaganomics and Mr. Beranke trying to calm us down. My own personal motto . . . trust no one
Actually we are in double digit unemployment. Look up "U6" unemployment. I believe it is around 16% right now. The government's official "unemployment" rate is false and misleading, and is used as a propaganda device to keep people calmer.
Recession is an economic term and depression is a political term. Thats why depression is so difficult to define. Reporting a recession is like coordinating an orderly evacuation due to a fire alarm. Depression is screaming 'FIRE' in a crowded theater.
YES THERE IS NO DOUBT THAT WE ARE IN A SEVERE RECESSION. THE QUESTION IS, WHAT DETERMINES A DEPRESSION BY TODAY'S STANDARDS. HOW LOW DOES THE DOW HAVE TO DROP. HOW LOW DO THE S&P 500 INDEX HAVE TO GO IN TODAYS SOCIETY TO HIT THE MARK OF A DEPRESSION. I THINK SEEING THE CONTINUAL SHIFT OF POWER FROM THE STATES TO THE FEDERAL GOVERNMENT GIVES US A BROAD INSIGHT THAT WE ARE OR ARE HEADING INTO SOMETHING WORSE THAN YOUR CLASSICAL RECESSION. IN 2010, UNEMPLOYMENT NATIONWIDE MIGHT SURPASS 13%. california and michigan may go to 18% WE NEED TO BE VERY WARY OF THIS
I agree with Rob, you said you wanted "change".....well you got it. Stupid never did say what the change was, you just assumed it was good. Don't get me wrong, there are things that should have been done differently over the last few years, but this is much worse. Our taxes are going shy high to save corporations, not the people. Enjoy your change, I'm moving out.
African-Americans are "already" in a depression as unemployment is already over 11%. We the people are to blame ultimatley for allowing this same leaders to be re-elected year after year and they have not been doing there jobs. The economy has been in trouble for many years actually before this meltdown. This country has been pretty much like a fake movie set with fake prosperity. And so many living beyond their means.Mercedes and privtae schools are NOT for the average working joe!! If you are a couple making $100,000 a year, YOU ARE NOT RICH, YOU DON'T SPEND IT ALL!! YOU LIVE ON A LITTLE OVER HALF AND SOCK AWAY THE REST!! In many other countries this would not be tolerated. Obama is not baby Jesus and can't fix it overnight! You can have have a great leader who's havnds are tied by a sorry out-of-touch congress to do battle with!! I haven't heard our Govenor even address the state of Texas to even acknowledge the economic downturn! All he does is go around beg for money the the goverors mansion! Yeah, the 2nd depression is here!
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