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Stock Market Crash of 1929.
The main difference between a recession and a depression is the severity and duration. Economists can provide statistics regarding Gross Domestic Product and Gross National Product and their subsequent declines as being the benchmark for describing an economic downturn as being a recession or depression, but most would agree that a depression lasts longer, and affects, not just the economically disadvantaged, but permeates into the upper middle and lower upper classes. Policy makers are hesitant to use the word “depression” because of the mental picture it evokes; potentially creating wide spread panic and causing further financial collapse.
Wikipedia sites the National Bureau of Economic Research in the US’s definition of a depression as being a recession that lasts for more than 2 years or a decline in Gross Domestic Product. So; how does the NBER define a recession? They are much more descriptive and less precise about what constitutes a recession: “a significant decline in economic activity, spreading across the economy, lasting more than a few months…. that is visible in employment, production and retail sales.” In summary, if a recession lasts long enough, it turns into a depression.
