One signal that a recession has become a depression? When GDP declines more than 10%

There's no single definition of an economic recession, though recessions are commonly identified by two consecutive quarters of shrinking gross domestic product.

A recession is commonly defined as two consecutive quarters of shrinking GDP, but in practice, these economic phenomena are more complex.

The clearest sign of a recession is a steady increase in job losses and high unemployment.

Economists define deflation as a sustained decline in prices across an economy

Deflationary periods are characterized by broad, significant price declines. The Federal Reserve can monitor deflation by tracking prices through price indexes, such as the Consumer Price Index (CPI), which characterizes the average costs for consumers each month.

The Great Depression is one of history's most notable periods of deflation

The stock market crash of 1929 helped trigger a period of deflation in the United States by creating a drastic decrease in the total money supply. Because of the United States' central role in the world economy, virtually every single country was impacted by the recession.

Roughly $5T of stimulus money flooded the economy during the pandemic

Recessions can last anywhere from months to years. To encourage economic growth, governments use policy levers such as lowering interest rates or introducing a stimulus. Economists credit massive stimulus funds for helping the economy quickly recover from a recession during the COVID-19 pandemic.

In 2025, the US credit rating was downgraded over concerns about the debt-to-GDP ratio.

Falling demand and lower costs of production cause deflation

"Falling demand" refers to anything that changes someone's willingness to spend money on goods and services. Global recessions, fears of a worldwide recession, and a fall in the money supply are all factors that could lead to falling demand. Likewise, lower production costs allow companies to increase production, which can lead to a surplus in supply.

Depression is much more than sadness—and isn't fleeting

The American Psychiatric Association's DSM-5—used for defining diagnoses—says a person must be experiencing five or more symptoms of depression most of the day over at least two weeks. Research indicates older people are less likely than younger people to meet that depression benchmark, though this article says they still often have at least several of the depression symptoms.

The Great Depression was an international depression felt far beyond the US

Many countries suffered through a depression in the 1930s that the First World War, the US stock market crash, and an economic downturn in Germany turned into an international crisis.

The US has been through 34 recessions since 1854

From 1855 to 2020, the average US recession lasted for an average of 17 months. But in the 20th and 21st centuries, the average recession length has shortened, decreasing to 14 months.

Disinflation, a decrease in the rate of inflation, is different from deflation

Disinflation happens when prices are still going up, just at a slower rate. Prolonged disinflation is also often accompanied by a recession, making it painful for consumers.

The Sahm rule attempts to predict recessions based on unemployment trends.

Some economists argue that the national debt is not a critical concern.

When consumers think an economic downturn is looming, the 'lipstick index' economic theory argues that sales of more affordable luxury items (such as lipstick) go up.

The UK was already in a depression before the US Great Depression took hold

The US Great Depression was felt globally, but the severity and length of different countries’ economic downturns varied. For instance, Japan was the first country to exit its depression.

Markets have always recovered and hit new highs following crashes

The crash that preceded the Great Depression was the most severe the US has ever experienced. It was 28 times worse than the downturn that followed the Cuban Missile Crisis.

'Good deflation' happens when prices naturally track with supply, meaning prices change gradually

This tends to make products and services more affordable and normalizes the standard of living. Bad deflation usually happens when there are sudden changes to either supply or demand. Near-zero [interest rates helped create the real estate bubble that sparked the Great Recession when it crashed](https://www.youtube.com/watch?v=LMo9mD8j7IA&t=91s) Because deflation distorts the value of money, deflation is particularly harmful for borrowers. Low interest rates made it easy for businesses and everyday people to take on enormous debt, which exacerbated the effects of the recession.

Experts don't believe upbeat tunes, called 'recession pop,' are legitimate recession indicators

Social media users have begun deeming pop music by the likes of Kesha and Katy Perry a "recession indicator" as they try to predict the next economic downturn.

Recessions are considered to be inevitable by modern economic standards

Recessions are caused by imbalances in the market and are guaranteed to happen in capitalist systems, but predicting them is a complex task.

In the wake of the Great Depression, a Russian-American economist named Simon Kuznets popularized the formula for gross domestic product to summarize the health of the economy and provide the American government with a metric to track growth.

An inverted yield curve has preceded every recession that’s occurred in the last 50 years

Prolonged yield curve inversions can predict recessions, but even brief inversions can cause investors to react with knee-jerk reactions.

The US unemployment rate soared to over 24% during the Great Depression, the highest in recorded history.

A V-shaped recovery from a recession is the most common kind

When charted, recession recoveries resemble letters including V, U, W, L, and K. For instance, an L-shaped recovery involves a steep decline that slowly reverses.

Having five of nine key symptoms constitutes a major depression

Before professional standards were adopted, practitioners used varying criteria to diagnose mental health disorders. By the 1970s, more objective lists were organized, culminating in this list of polythetic criteria—a list of symptoms where no single criterion is required, but a minimum number must be present.

The Federal Reserve fought the Great Recession primarily with quantitative easing and repurchasing agreements.

Gross domestic product only accounts for consumer spending, investments, government spending, and net exports—meaning factors such as stock market performance, Social Security payments, household labor, and the value of environmental damage largely aren't represented.

US depression rates at historic high among adults

More than 18% of US adults reported that they currently have or are being treated for depression in both 2024 and 2025. In the 2025 survey, more than 11,000 adults were surveyed. The numbers have ticked upward since 2015—by about 8 percentage points—with most of the increase occurring from the 2020 pandemic onward.

In 2023, the US money supply fell at its fastest rate since the 1930s

The money supply tracks how much cash, as well as electronic funds like savings accounts, is circulating through the economy. And a downward turn can be a bad sign.

The men’s underwear index predicts recessions based on men’s underwear sales

Internet users have been using some nontraditional indicators to predict whether a recession is imminent, including the return of so-called “recession pop.”

The psychological aspect of deflation makes it difficult for policymakers to stabilize the economy

That psychological aspect is referred to as "the deflationary spiral." When prices start decreasing, people tend to hold on to their money to pay the lowest prices. But as prices start stabilizing, people resist increasing prices. (Some users may experience a paywall.)

Read about the evolution of the S&P 500 and its recession recovery

Since the S&P 500 is considered a bellwether index (meaning it represents the health of the US economy), its value is important for investors in both bull and bear markets. The S&P 500 has been impacted by recessions and downturns, from the 1970s oil crisis to the dot-com crash of the early 2000s.

COVID-19's shock to employment rates sparked some economists to fear deflation

COVID-19 simultaneously disrupted the supply chain and the labor market. Since the unemployment rate had hit record highs, some economists were worried that the supply chain would recover before the labor market. If that had happened, businesses would have been producing goods, but no one would have been able to buy them because they wouldn't have the disposable income to do so.

Learn how 'real' and 'nominal' gross domestic product differ, with real GDP being adjusted for inflation and nominal GDP reflecting current monetary values.

There are three different ways to calculate gross domestic product: the expenditure approach, the value-added approach, and the income approach.

Consumer spending accounts for 70% of America's gross domestic product.

The national debt is growing at a faster rate than the economy.

Experts recommend preparing your finances accordingly if you're expecting to be laid off soon, taking actions such as looking into the cost of replacing employer-sponsored benefits like healthcare.

Some argue that the rising US national debt has become more important in recent months.

Why there's a snack recession

Inflation and economic uncertainty have driven many Americans to make cuts to their snack budgets, according to reports from major food manufacturers like General Mills, JM Smucker, and Campbell's. Major retailers have also observed lower-income consumers cutting back on nonessentials due to the macroeconomic environment.

Indicators of economic bubbles include euphoric narratives and extreme valuations.

Explore a breakdown of the US gross domestic product, including GDP's growth over time, the GDP of individual states, and which industries contribute the most to US GDP.

The world's most famous case of deflation happened after Black Thursday

While the details are not fully agreed upon, many economists point to the Federal Reserve's tightening of the money supply as a prime culprit, leading to a significant deflationary spiral.

Grief is defined as the anguish and physiological distress experienced after significant loss

It usually occurs following the death of a loved one, and symptoms may include confusion, apprehension about the future, separation anxiety, and ruminating on the past.

A list of the world's top 25 economies by GDP

Gross domestic product estimates the value of goods and services produced in a country, typically through the expenditure method, which adds up spending by consumers, investors and governments with the value of exports. The top five economies are the US, China, Germany, Japan and India.

What is quantitative easing?

Quantitative easing was a relatively new method the Federal Reserve used to curb deflation during the Great Recession. In this process, a central bank digitally creates money that is used to purchase assets, usually government bonds. This lowers returns on low-risk bonds, encouraging investors to put their money in high-risk, short-term stocks, and moves money through the system.

A Tiger economy typically describes a booming Southeast Asian country

The term “tiger economy” has been used over the last several decades to describe a developing country experiencing rapid economic growth, often due to developing export-oriented industries and/or financial markets. The term was originally applied to Southeast Asian economies, including South Korea’s, and has since been used to describe Ireland, the Baltics, and Dubai.

Roughly 10% of the world has SSAD—SAD’s milder, nonclinical cousin

Subsyndromal affective disorder is diagnosed when someone exhibits two of the nine major criteria for depression (but not more than five) as a result of seasonal changes. While it is milder than primary SAD, SSAD is still significant and impacts millions.

These areas of the brain are hard-hit in depression—but the changes are reversible

Depressed brains can have certain characteristic changes, including an overactive amygdala, reduced hippocampus size, and changes to the thalamus and neuromodulating chemicals in the brain.

Key moments that shaped the national debt include the Civil War, both World Wars, the 2008 recession, and the COVID-19 pandemic.