The Wall Street Journal has a story today looking at what a modern depression would look like. The story asserts:

There is no consensus definition for "depression." Harvard University economist Robert Barro defines it as a decline in per-person economic output or consumption of more than 10%, and puts the odds of a depression at about 20%. Many economic historians say the line between recession and depression is crossed when unemployment rises above 10% and stays there for several years.

The current recession, though severe, is not at depression levels now. Unemployment in February was at 8.1%, not as bad as in the early 1980s — the last time the idea of a depression was being kicked around seriously, when it remained over 10% for 10 months. In the Great Depression it reached 25% [emphasis added]

   Well, then, we are certainly headed for a depression by that definition. The fact is unemployment IS already in double-digits–if you actually count the people who have fallen out of the workforce because they have given up looking for work, not to mention the people who would like full-time work but can’t find that. I am not predicting that it will stay that way for "several years" but it is certainly at that level now.

   Though I also need to add that I don’t think that we are going to see one out of four people out of work, largely because we do have a safety net–that’s why we have government, among other reasons–that did not exist in the 1930s.

   But, in many ways, the hype about whether we will have another Great Depression is a distraction. The problem really is that even when we have "low unemployment" people can’t make ends meet because–and this is the real story of the last three decades–wages have not kept pace with productivity. Put another way, people are working their asses off but have had to rely on credit cards and other non-paycheck strategies to survive.