The old joke says that a recession is when your neighbour loses his job and a depression is when you lose yours. But the reality is that economists have no firm benchmark for what distinguishes one from the other. This has given rise to some unwarranted comparisons between today’s crisis and the calamity of the 1930s. Type the term “Great Depression” into the press search engine Factiva and nearly 11,000 references over the past three months pop up, almost four times the same period a year ago. Several articles refer to recent stock market gyrations or house price declines, which are indeed some of the worst since the 1930s. Even so, a bit of perspective is in order.

From 1929 through 1933, the United States saw real economic output fall by nearly a third and unemployment soar from 3 per cent to 25 per cent. Stock prices took a quarter century to regain their peak. Since then, referring to an economic downturn as a “depression” has been seen as alarmist. Carter administration economist Alfred Kahn was famously admonished when he warned of one (he cheekily called it a banana instead). Even the worst postwar downturn, from 1973 through 1975, saw US output, from quarterly peak to trough, fall by almost 3 per cent and unemployment rise to 8.3 per cent – nasty, but a different order of magnitude entirely.

When that recession began, Ben Bernanke was a university student, Hank Paulson was just joining Goldman Sachs, and many of today’s masters of the universe were still in diapers. But the fact that they might have needed them again during the past several weeks does not make the looming downturn a depression. In spite of George Santayana’s famous warning about being condemned to repeat the past, the policy mistakes of the 1930s are the most-studied of all time. Unless governments reverse their forceful response – with ruinous trade wars, tighter money and balanced budgets – “depression” will remain a word for the history books.

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