Depression vs. Recession The recession is a normal part of the business cycle, which generally occurs when GDP contracts for at least two quarters. Depression, on the other hand, is a significant downturn in economic performance that has lasted for years rather than only a few quarters. This makes recessions much more common: there have been 33 recessions and only one depression since 1854. Moreover, economists see a recession as two consecutive quarters of negative GDP growth, even if those periods of contraction are relatively mild. Depression, on the other hand, is marked by a drop in annual GDP of more than 10% or more. Example of Economic Depression The Great Depression lasted nearly ten years and is generally recognized as the greatest economic crisis in the history of the developed nation. It started shortly after the U.S. stock market collapse of October 24 , 1929, known as Black Thursday. After years of careless investment and speculation, the stock market bubble burst and a huge sale began, with a record 12.9 million shares traded. The United States was still in decline, and on the next Tuesday, October 29 , 1929, the Dow Jones Industrial Average dropped by 12 per cent in another retail auction, marking the onset of the Great Depression. Although the Great Depression began in the United States, the economic impact has been felt worldwide for more than a decade. The Great Depression was marked by a drop in consumer spending and investment, and by catastrophic unemployment , poverty, hunger, and political unrest. In the United States, unemployment rose to nearly 25% in 1933, remaining in double digits until 1941, when it finally receded to 9.66%. What Triggers Depression? A number of factors can lead to a severe contraction of the economy and production . In the case of the Great Depression, the blame was laid on weak monetary policies. After the stock market collapsed in 1929, the Federal Reserve ( Fed) continued to raise interest rates — defending the gold standard took precedence over pumping money into the economy to encourage spending. These actions triggered a massive deflation . Costs fell by 10% each year, and customers, knowing that costs for products and services would continue to decline, refrained from making transactions.