Use of the D word could spell danger

Explicit content warning: This column contains frequent use of the "R" word and the "D" word.

The British Prime Minister shocked the House of Commons this week by declaring that a global stimulus package was needed to get the world "out of depression".

It was a gaffe, Gordon Brown later claimed - he meant to say recession. But one can't help feeling he's let the cat out of the bag. He has said the un-sayable. He dropped the D-bomb.

Like the stand-up comics of the 1960s he's freed us to talk publicly about something we were all thinking anyway.

Yesterday Bloomberg news reported a US fund manager warning of a "mini-depression".

Okay, that's clearly barking. The subtle difference between a mini-depression and a big, fat whopping, great recession is surely just a figment of the headline seeking pundit's imagination.

But it does illustrate that the D word is quietly sneaking back into the lexicon.

Regardless of how bad this downturn gets will there ever be good cause to call it a depression? Some argue that the Great Depression - like the Great War - was the depression to end all depressions.

Technically though the downturn of the 1930s was "Great Depression Two".

The big slump of 1873 to 1896 was popularly called The Great Depression until it was usurped in the 30s. In fact before the 30s downturns were regularly described as depressions. After that the term went out of favour with both economists and the public.

The trouble with the D word is that it has no agreed meaning outside of its use as a historic reference point. Recession is generally defined as at least two quarters in a row where an economy contracts. But there is no official next step up to depression.

So if the term does get bandied about again it will likely be as a cultural reference to the severity of the wider social impact.

From this end of the world talk of depression still sounds way off the mark. Thus far the local recession is yet to take us anywhere near the economic hardship and social breakdown experienced through the high unemployment years of the 1980s and early 1990s. Unemployment peaked in 1992 at about 10 per cent of the population - 25 per cent for the Maori population.

This week unemployment levels clocked in at 4.6 per cent - a level last seen in 2004. Economists have their worst case scenarios set at about 7 per cent unemployment by mid 2010.

But we shouldn't kid ourselves about the gravity of the situation. For the past 12 months the most accurate predictions have come from those who pick worst case scenarios and throw in a bit of extra gloom for good measure.

In the US talk of depression has a more serious ring to it. Job data out this week showed unemployment at its highest level in 26 years.

Barack Obama - admittedly lobbying to get his stimulus package through Congress - warned in stern tones that things were getting worse every day and millions more jobs were at risk.

Obama didn't go near the D word. But he did admit that the recession was keeping him awake at night. In the grip of a February heatwave there's plenty here who will relate to that.

After job losses and business failures the recession's darkest power is that which it wields over our collective psyche. If we let it, it can consume us. It wakes us in the night to leave us worrying fruitlessly about cutting costs and where our next sale is coming from.

Like the fear of death it can be suffocating. A recession can be deeply depressing indeed but it need not be Depression. And there will never be anything great about it.