There is no agreed economic definition for a depression. Some think it is simply a longish deep recession. No matter what the definition, to prevent their recurrence modern economists have removed this word from their vocabulary.
NBER can rectify this omission by calling a pig with lipstick a pig.
The Federal Reserve has issued its Z.1 Flow of Funds Accounts of the United States for Second Quarter 2010. Joe Sixpack got poorer in 2Q2010 by 2.7%. Quite unusual in a “recovery”.
The economy of Joe Sixpack is not good.
The Bank of Tokyo – Mitsubishi approached this Federal Reserve release from a different perspective – the ratio of household financial liabilities to disposable income
If households continue to pay down debt at 2009’s rate, and income does not improve, it would take about 7 years to get financial liabilities back on par with disposable income. However, a combination of growth in household wealth and growth in income from an improving labor market should help speed up the process, but only if households continue to keep new debt issuance in check in the meantime. But not only will keeping credit demand in check get progressively harder as the economy creates more jobs and consumer confidence improves, it also implies a consumer that stays entrenched in fiscal conservatism – not a good sign for the economic outlook. Rather, striking a healthy compromise between household conservancy and household demand for credit would be preferable.