The Great Depression in the U.S. is considered to have started at the stock market crash of October 29, 1929. Prior to that time there were indeed financial difficulties in the U.S. but it was considered a recession not a depression. I understand that this can be argued and that many will place a fine line in the difference between a recession and a depression. I also agree that the government waits and extended period of time before declaring either one, supposedly out of fear that people will panic and thereby cause it to escalate. The U.S. has experienced many recessions throughout it's history but only one that led into the full blown depression of the Great Depression.
"Prior to that time there were indeed financial difficulties in the U.S. but it was considered a recession not a depression."
Not true:
Actually they were referred to as "Panics" in the 1800's. It is largely a matter of semantics. The modern definition is that a recession is "the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out" A depression is "any economic downturn where real GDP declines by more than 10 percent."
There have been a number of depressions in US history - 1819, 1836-37, 1857, 1873, 1893-5, and 1921, but none since the Great Depression of the 1930's.
Employment is a lagging indicator, not a leading one, so unemployment won't start to rise until we are well into a recession. Businesses hesitate to lay off trained employees if they have any hope things may soon turn around, so they wait until it is obvious that things are still declining. Untrained laborers go sooner as they are more easily replaced. Louis Lamour was working at day labor and unskilled jobs in the 1920's, and they were drying up by 1927 - therefore the economy was already in decline by then.
Today there are fewer jobs for unskilled labor, so employment holds up better and longer. Most of the unskilled jobs are held by immigrants, so it is interesting to see some are starting to leave, partly because of a crackdown on illegals, but also because jobs are getting hard to find: "The toughening environment has been coupled with a turndown in the U.S. economy, which has tipped the balance toward self deportation for many illegal immigrants left struggling to find work." From:
http://www.reuters.com/article/domesticNews/idUSN2126758320071224Whether we go into a depression or just a recession is hard to predict. Usually the bigger the bubble the more disastrous it is when it pops, and the housing bubble was a big one.
(The median income is about $25,000 (http://www.ssa.gov/OACT/COLA/central.html) so half of the people can afford less than $625 in monthly payments - far less than what they would have to pay at the inflated housing prices today.) Japan has never yet recovered from the bursting of the housing bubble on which its former "booming" economy was based. Our government has also removed most of the legal safeguards and restraints on the financial system enacted after the Great Depression that prevented it happening again. Nixon debased the currency. Much of our economy is a house of cards. We have largely stopped producing much of value and become a nation of gamblers and speculators. Maybe it won't catch up to us this time, but if the government manages to patch things together they will only be worse a few years from now unless we make fundamental changes in our way of life.
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