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Great Depression

Definition

The Great Depression was a severe worldwide economic depression that took place during the 1930s. It began in the United States after a major fall in stock prices around September 29, 1929, and became worldwide news with the stock market crash of October 29, 1929.

Analogy

Think of the economy as a game of musical chairs. During the Roaring Twenties, everyone was dancing around happily with plenty of chairs (wealth) to go around. But when the music stopped (the stock market crashed), there weren't enough chairs for everyone, leading to widespread unemployment and poverty - this is like the Great Depression.

Related terms

Stock Market Crash of 1929: This event marked the beginning of the Great Depression as millions of shares became worthless and investors lost billions of dollars.

New Deal: A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in response to alleviate suffering caused by the Great Depression.

Unemployment Rate: The percentage of unemployed workers in relation to all individuals currently in the labor force. During the Great Depression it reached an unprecedented level at about 25%.