CNN's Christine Romans looks at whether the USA is in a true "depression" and what the term even means.
Transcript
ROMANS (voice-over): President Obama knew he was taking office in the grips of a nasty recession. But is it something worse? There it is in black and white. "U.S. Depression looking likely," from Albert Edwards, a London-based analyst for French banks, "Societé General." He wrote last week, quote, "Economic data has been truly dreadful, consistent with something far worse than a deep recession".
Scary stuff, and pretty much the worst case scenario. Labor economist Peter Morici also recently declared, quote, "The U.S. is already in the jaws of a depression."
PETER MORICI, UNIVERSITY OF MARYLAND: We're in a depression because of structural issues in the economy. Our excessive dependence on imported oil and our huge trade deficits are pulling us down. The stimulus package will give us some temporary relief, but then the economy will sink back.
ROMANS (voice-over): The very word depression conjures up unpleasant memories of the last century -- 25 percent unemployment and an economy that shrank 30 percent. Depressions are so rare; there isn't really an official definition.
(on camera): Is this a depression?
ANIRVAN BANERJI, ECONOMIC CYCLE RESEARCH INSTITUTE: No, it is not.
ROMANS: Anirvan Banerji studies economic cycles. First, there was a downturn. Then, a slowdown. Now, an official recession, but a depression, he says, it is not.
BANERJI: If the economy looks bad now, for it to be in depression means it will look much worse, several times as bad.
ROMANS: Many wonder how can we be in a depression when the majority of Americans have not lost their job or home, and everyday life looks on the surface at least pretty much the same. But that fear of depression runs deep. Fears shared by the last treasury secretary and the Fed chairman last fall.
GEORGE BUSH, FMR. PRESIDENT OF THE UNITED STATES: I was concerned that the credit freeze would cause us to be -- headed toward a depression greater than the Great Depression. That's what I was told -- if we didn't move.
ROMANS: Outgoing President Bush said his actions prevented it. President Obama plans to spend hundreds of billions more to make sure is doesn't happen on his watch.
ROMANS (in studio): On his watch, indeed. OK, this is all semantics, really. You know, we didn't even start using the word recession until after the Great Depression. You can call it a severe recession. You can worry about a depression. But it doesn't change what people are feeling. And economists agree there will be more layoffs, more businesses will fail and more foreclosures in the coming months. You can see about six months out. And six months out, as Jeffrey Sachs said earlier in the program, it looks pretty ugly.
