WHAT IS 'Depressed'

Depressed refers to a state or condition of a market, product or security characterized by slumping prices, low volumes, and lack of buyers. It usually represents a prolonged period of low prices and activity. The term may also be used in the context of the broad economy, in which case it generally refers to severely recessionary conditions. 


Depressed prices can usually be found in markets after prices have run up, peaked and subsequently declined for a prolonged period. Prices may remain in a depressed state for months, if not years, depending on the extent to which they had rallied beforehand and the amount of over-capacity or excess supply.

Depressed conditions can be found in many markets. One prominent example was the U.S. housing market after the subprime real estate market burst in 2006. Excessive real estate speculation throughout the 2000's led to a housing bubble. When the bubble burst, millions of homeowners were forced into foreclosure, creating an excess supply of homes that lasted for years. In a severely depressed market, like the U.S. real estate market from 2008 to 2012, the market is defined not just by low prices, but also by low transaction volume.

Examples of Depressed Assets

A period of depressed asset prices can befall any number of asset classes, from real estate to bonds to stocks. The global market for commodities is one market that has recently been depressed. Between 2008 and 2018, the Dow Jones UBS Commodities Index lost more than half its value, reflecting a prolonged decline in demand for raw materials.

Entire economies can also be referred to as depressed, the most famous case being the Great Depression, which lasted in the United States from 1929 until the start of World War Two. Economic depressions are characterized by a severe and prolonged contraction of economic output in a particular economy or economies, and typically lead to excess supply over demand, unemployment, and bankruptcy of private businesses. They are more severe than recessions, which are less pronounced contractions that occur as a regular feature of the business cycle.

Prior to the Great Depression, the most severe depression to affect the United States and Europe was the Long Depression, beginning in the early 1870's, as the result of dislocations caused by the U.S. Civil War, conflicts in Europe and from over speculation and investment in railroad construction.

  1. Economic Collapse

    An economic collapse is a prolonged breakdown of a country's ...
  2. Bottom Fishing

    Bottom fishing is the process of investing in assets that have ...
  3. The Great Recession

    The Great Recession was the sharp decline in economic activity ...
  4. Recession

    A recession is a significant decline in activity across the economy ...
  5. The New Deal

    A series of domestic programs designed to help the United States ...
  6. Housing Bubble

    A housing bubble is a run-up in home prices fueled by demand, ...
Related Articles
  1. Insights

    Lessons Learned From the Banking Crisis

    There are lessons to be learned on how to handle severe financial downturns, and while the Fed is learning, politicians may not be.
  2. Insights

    How Do Asset Bubbles Cause Recessions?

    Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles.
  3. Insights

    Can Keynesian Economics Reduce Boom-Bust Cycles?

    Learn about a British economist's proposed solution to a common economic problem.
  4. Insights

    The Dangers Of Deflation

    We look at what life would be like in a deflationary environment, and what you can do to protect your investments.
  5. Trading

    The Crash Of 1929 - Could It Happen Again?

    Learn about the series of events that triggered the Great Depression.
  6. Insights

    The Upside of Deflation

    Deflation has continued to pop up throughout economic history—but is that such a bad thing?
  7. Investing

    Cerecor Nicotine Withdrawal Drug Fails Study (CERC)

    Cerecor's stock price tumbled to a 52-week low after both its nicotine-withdrawal drug and its depression drug failed in separate clinical trials.
  8. Insights

    Some Industries Are More Bubbly Than Others

    Investors who want to avoid future bubbles should learn from the past in order to protect their investments.
  9. Investing

    Key Reasons To Invest In Real Estate

    There has been a lot of negativity over the real estate sector since 2008. Here are the reasons why you should be investing in it.
  1. What caused the Stock Market Crash of 1929 that led to the Great Depression?

    Find out what led to the stock market crash of 1929, which in turn fueled the Great Depression, sparking a nearly 90% loss ... Read Answer >>
  2. What is demand-side economics?

    Learn the basic theory of demand-side economics, which emphasizes the importance of aggregate demand and supports government ... Read Answer >>
  3. How do investors lose money when the stock market crashes?

    Find out how investors can lose money due to stock market crashes. Learn how fluctuating share prices affect overall wealth. Read Answer >>
  4. How successful have "dove" Federal Reserve heads been in the past when it comes to ...

    Review a short history of "dovish" leaders of the Federal Reserve, who use U.S. monetary policy to reduce unemployment through ... Read Answer >>
  5. How long has the U.S. run fiscal deficits?

    Read about the history of deficit spending in the United States, dating back to 1789, and learn about then-Treasury of the ... Read Answer >>
Hot Definitions
  1. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  2. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  3. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  4. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  5. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  6. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
Trading Center