Definition
The Great Depression was the most severe and prolonged economic downturn of the industrial era, lasting through the 1930s. It began in the United States — conventionally dated to the stock market crash of October 1929 — and spread worldwide through trade and financial links.
At its depth, industrial output collapsed, banks failed in waves, prices fell sharply, and unemployment in some countries reached a quarter of the workforce. For tens of millions of families, the Depression meant lost savings, lost homes, and years of hardship.
Why it matters
How it works
A depression is a self-reinforcing contraction. As demand falls, businesses cut output and lay off workers; unemployed workers spend less, which lowers demand further. Bank failures destroy savings and credit, choking off the lending that businesses need to recover.
Recovery came slowly and unevenly. Some governments expanded public spending and welfare programs, abandoned the gold standard, and reformed banking. Full recovery for many economies arrived only with the industrial mobilisation of the Second World War.