How bad might it get? The Great Depression

As the economic carnage from the coronavirus pandemic continues, a long-forbidden word is starting to creep onto people’s lips:
“depression.”
In the 19th and early 20th centuries, there was no commonly accepted word for a slowdown in the economy. “Panic” was the term typically used for financial crises, while long slumps were commonly called depressions. Presidents such as James Monroe and Calvin Coolidge used the d-word to describe downturns during their administrations. There was even a slump in the 1870s that many referred to as the “Great Depression” at the time.
But then 1929 came, and there was no longer any doubt as to which depression deserved the modifier “great.” The crash hit the entire world, reducing economic output 15%. And it ground on mercilessly for years — by 1933, unemployment in the US was at 25%. The Great Depression
was so severe that governments permanently expanded their role in the economy.
Since the 1930s, economists and commentators have used the word “recession” to describe economic slumps, and none of them have been nearly as severe as the Great Depression. The only time this convention was really challenged was after the financial crisis of 2008. The global nature of the downturn, sparked by troubles in the financial industry, led many to draw parallels with the Great Depression. In the end, the term “Great Recession” stuck.
The economic damage from coronavirus, however, threatens to dwarf the 2008 downturn. More than 22 million people, or about 13% of the US labor force, have already filed for unemployment:
Current forecasts are for the unemployment rate to reach 20% this month. Some predict it could go as high as 30% this year. That would eclipse even the Great Depression in severity.
So if severity alone is the criteria for a depression, this one will certainly deserve the moniker. President Ronald Reagan once quipped that “recession is when your neighbor loses his job; depression is when you lose yours.” There will be few people whose economic livelihoods are not hurt by the coronavirus. But there are other possible criteria for deciding what gets labeled a depression. Besides severity, there’s duration; both the 1870s and the 1930s saw a decade of economic pain. Many hope that the economy will bounce back from the coronavirus in a so-called V-shaped recovery. It stands to reason that if the economy crashed because it was intentionally turned off by mandatory shutdowns, then letting people out of their houses will turn it back on.
Many of the economic relief measures now being implemented, such as the Paycheck Protection Program — which extends loans to small and medium-sized businesses that are forgiven if they retain their workers — have this sort of quick restart in mind. But while that’s a good idea, there are reasons to believe this downturn will not be over quickly.
First, there’s evidence that the main reason people are staying at home is not lockdowns but the threat of the virus itself. Data from online restaurant-reservation websites shows that in major cities, most of the decline in restaurant attendance happened before stay-at-home orders were issued. And polls indicate that most Americans are very wary of returning to their normal activities. This means that unless virus suppression regimes give people confidence that coronavirus isn’t a threat to their personal safety, they’re unlikely to come out and shop even if the government says there’s no need to worry. Because effective treatments probably won’t be available at least until the fall or later, that means many more months of business devastation except in the few competent and lucky places that get test-and-trace systems in place.
—Bloomberg