A long line of jobless and homeless men wait outside to get a free dinner at New York City's municipal lodging house in 1932. At the peak of the Great Depression, 27 per cent of Canadians and 25 per cent of Americans were out of work. (Associated Press)

U.S. president-elect Barack Obama had a gloomy warning for his audience at George Mason University in Virginia on Friday.

"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs," Obama said. "More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."

Sinking deeper into an irreversible crisis sounds a lot like depression with a capital D.

But most economists say comparing today's economy to the grinding hopelessness of the 1930s is not viable.

In Canada, Depression unemployment peaked in 1933; 27 per cent of Canadians were out of work. In the U.S., unemployment hovered around 25 per cent. Compare that with the Canadian unemployment rate of 6.6 per cent in December, and 7.2 per cent in the U.S.

Times are surely tough, but not dire.

Counting the jobless

Many things have changed since the '30s, including the way we count the jobless. Everyone who needed a job but didn't have one was counted as unemployed during the Depression.

Now, people who want to work but have given up on searching for a job are considered by Statistics Canada to be discouraged — not unemployed. To be unemployed, a person must be looking for work, have a job lined up, or only be temporarily laid off.

"Factoring in discouraged workers, unemployment [in the United States] is closer to 9.4 percent," says Professor Peter Morici of School of Business at the University of Maryland and former Chief Economist at the U.S. International Trade Commission.

"Add workers in part-time positions that cannot find full-time employment and the hidden unemployment rate is 14.5 per cent.

"Unemployment will rise again and continue at unacceptable levels indefinitely without successively larger stimulus packages and huge federal budget deficits. The economy is [in] a depression, not a recession," he says.

Since being unemployed feels much the same in a recession as a depression, should we care?

Depressions aren't self-correcting

"Recessions are like stock market corrections, after a time, equity prices rebound without government intervention," says Morici.

"A depression is not self-correcting. The current economic slowdown has two structural causes: bad management practices at the large money centre banks and the huge foreign trade deficit. These problems are not self-correcting."

Still, not everyone is convinced we're in a depression, despite the lousy job numbers.

"The bad news is that we are in a recession, and a fairly deep one at that," says Jeff Rubin, CIBC World Markets chief economist, in his latest Canadian Portfolio Strategy Outlook Report.

"The good news is that the stock market has already discounted a depression. That's why no matter how severe the recent non-farm payroll losses are, or how dismal the manufacturing index numbers get, the stock market soon shrugs it off."

Depressed or recessed, discouraged or employed, 2009 could be a tough year for many to shrug off.