An economic depression usually results from a period of economic turmoil based on the country’s Gross Domestic Product (GDP) rate. Whether you knew this or not, an economic depression is way worse than a recession, as GDP is constantly falling, and it usually lasts for a longer period of time.
In America, the Great Depression lasted for more than a decade, as the unemployment rate reached 25% and wages fell by 42%. An economic depression is mainly caused by terrible consumer confidence, which oftentimes leads to a drastic decrease in demand. As a result, many companies are forced to go out of business.
When consumers stop consuming, so to speak, companies are obliged to consider budget cuts, which include firing workers as well. Let’s reevaluate some of the factors that could lead to an economic depression: