What Is an Economic Depression? Definition, Characteristics

What Is an Economic Depression?

By Kristi Waterworth – Updated Aug 7, 2025 at 9:03 PM

Key Points

Economic depressions are severe recessions lasting many years with over 10% annual GDP decline.
Depressions cause global impacts like massive unemployment and business failures.
The US experienced one true depression, the Great Depression, lasting from 1929 to 1939.

You've probably heard that there's a recession forecast, but a term that doesn’t come up as often is the closely related "economic depression." A depression can be a very serious situation for global economies, but they (fortunately) don't happen very often.

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Globalization

A multifaceted process integrating economies, societies, and cultures globally through trade, communication, and transportation networks.

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It can be difficult to tell a very bad recession from a less terrible depression, but a general rule of thumb is that a recession is contained within the originating country, whereas a depression spills over globally and causes a lot of ripple effects. However, increased globalization can make them less of a differentiator.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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