U.S. ECONOMY DEPRESSION AGAIN ?

What is recession ? Recession is a contraction phase of economy cycle. In other words, it is a downturn phase of economy.

And what is depression ? Depression is a severe economic downturn that lasts several years.

Great Depression 1929, everybody who cares about economy knows this history shock. America suffered negative GDP growth continuously in Great Depression 1929.

1. 1930 -8.6%
2. 1931 -6.4%
3. 1932 -13%
4. 1933 -1.3%.

GDP contracted sharply from 1929 - 1932. The worst economy situation happened in 1932 where GDP had a negative 13% growth.

As an economy barometer, Dow Jones felt from 386.10 (highest point on 3 Sep 1929) to 40.56 (lowest point on 8 Jul 1932). Translate to percentage, Dow Jones lost 89.49 % within 3 years.

Refer to the chart above, Dow Jones took 25 years to come back to prior to crisis level. Market closed at 387.79 in 26 Nov 1954. Man! It was a long process for the recovery. The main concern now is, if America falls into depression as a result of subprime crisis, how long the recovery will be.

Dow Jones made a record high at 14,280 on 11 Oct 2007. If depression is on its way, 4000 level is also possible. We hope it is not the case.

Beside pray, what can we do?