When will (or did) the US enter an economic depression?

Background: Unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s. While no one disputes that the current economic downturn qualifies as a recession--as recessions have two handy definitions, both of which are in effect now: two straight quarters of economic contraction, or when the National Bureau of Economic Research makes the call--declaring a depression is much trickier.


By one definition, it’s a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn’t qualify yet: 15 months old and 7.6 percent unemployment. But both unemployment and the 6.2 percent contraction for late last year could easily worsen. Another definition says a depression is a sustained recession during which the populace has to dispose of tangible assets to pay for everyday living. For some families, that's happening now. Still another definition says a depression is a recession that "does not self-correct" because of fundamental structural problems in the economy, such as broken banks or a huge trade deficit.

The Great Depression retains the heavyweight crown: unemployment peaked at more than 25 percent, the economy shrank 27 percent from 1929 to 1933, and the stock market lost 90 percent of its value from boom to bust. But while last year in the stock market was the worst since 1931, the Dow Jones industrials would have to fall about 5,000 more points to approach what happened in the Depression. Also, while the current downturn has many of the 1930s characteristics--including being primed by big stock market and real estate booms that turned to busts--policymakers and economists note there are safeguards in place that weren't there in the 1930s: deposit insurance, unemployment insurance and an ability by the government to hurl trillions of dollars at the problem, even if it means printing money.

Today's economic indicators don't project a depression. But many economists are being cautious. After all, economic data in 1929 didn't show that the stock market crash was about to lead to years of economic misery, either.

This market asks: when will the National Bureau of Economic Research (NBER) declare that the US entered a depression?

Settlement details: As reported by the National Bureau of Economic Research (<a href="http://www.nber.org/">http://www.nber.org/<;/a>). Note: this market is concerned with the period the NBER says that the US entered a depression, not necessarily when the announcement was made. For example, if the NBER announces in May of 2011 that the US entered a depression in November of 2009, this will settle as option #3 (During the second half of 2009). If the NBER hasn't announced by the suspend date that the US has entered a depression, this will settle as option #7 (During or after the second half of 2011, or never), even if a later announcement is made.