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Many economists and analysts are worried that the coronavirus outbreak could disrupt life in the U.S. for an extended period and in turn drag the economy into a recession. Monday’s severe stock selloff and worse-than-expected economic data from China and the U.S. have further intensified that fear.

In a possibly worse scenario, could the economy slow even further—beyond a recession and into a depression?

That might seem to be extremely unlikely, just by looking at history. There have been 33 recessions since 1854, according to the National Bureau of Economic Research, but only one depression—the Great Depression that lasted from 1929 to 1938.

Time span is the key differentiation between a recession and a depression. While a recession is typically declared when economic activities decline for two consecutive quarters, a depression means the downturn has lasted a much longer time—usually years—with much deeper impact.

During the Great Depression, for example, U.S. economic output shrank 8.5% in 1930, followed by 6.4% and 12.9% decline, respectively, in 1931 and 1932. By 1933, the four-year contraction had left the economy only half the size it was in 1929.

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An extended period of deflation back then caused consumer prices, worker wages, home values, and global trade to sharply decline, which drove many companies into bankruptcy and workers out of jobs. The Bureau of Labor Statistics estimated the unemployment rate soared to nearly 25% in 1933.

It’s hard to say what causes a depression since the sample size is so small. But for the only one in modern history, it took a perfect storm of negative events—the Federal Reserve’s tightening monetary policy and a decadelong drought in the Midwest among them.

None of these risk factors exist in today’s environment. Central bankers and politicians have learned to support the economy with expansionary monetary and fiscal policy such as interest-rate cuts, liquidity injections, tax relief, and industry bailouts. These measures successfully prevented a depression during the 2008-09 financial crisis.

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Still, the stock market’s dive over the past few weeks seems to suggest that investors are still worried that the pandemic’s disruptions to the economy could be more severe than expected.

All three major U.S. indexes have fallen into bear-market territory at record speed. The Dow Jones Industrial Average took a 13% dive on Monday in its second-worst session ever—ranking only behind the 1987 Black Monday crash. Even the Great Depression didn’t seen a sharp drawdown in the index of this magnitude.

China, where the Covid-19 outbreak first began, offers some clues. Its economy suffered a historic slump in the first two months of the year, despite solid growth before to the outbreak. For January and February, Industrial production shrank 13.5% from the year-ago period, retail sales fell 20.5%, fixed-asset investment slid 24.5%, and unemployment rate jumped to 6.2%. Economists hadn’t expected such sharp declines.

China’s numbers have sounded the alarm for U.S. investors that things can get ugly fast at home too, amid closed stores and restaurants, canceled events, postponed travel, and possibly vanished jobs. Already, manufacturing activity across the New York region—often considered a key indicator of the nationwide trend—has plunged, with the New York Fed’s March manufacturing survey falling to negative 21.5 in March from 12.9 in February—the biggest one-month drop in history.

While the Fed has shown full commitment to mitigate the damage, a low-rate environment over the past few years has depleted much of its firepower. The central bank on Sunday cut interest rates to a range of 0 to 0.25%, which means it is effectively out of basis points, unless officials decide to move to negative rates.

The Fed also announced on Tuesday that it was taking measures to support the market for short-term corporate debt. Fed Chair Jerome Powell said on Sunday that the central bank still has plenty of other tools, but also emphasized that fiscal actions are needed to help Americans keep paying bills even if they are stuck at home.

Still, economic stimulus can’t fully offset the demand shocks caused by the coronavirus outbreak. After all, even with money in their pockets, Americans are still likely to avoid traveling and dining out—either voluntarily or because of official mandates—while the outbreak is in full force.

If Saudi Arabia and Russia continue to oversupply the oil market in their price war, the built-up inventory could keep crude prices low for an extended period and severely pressure the oil industry. Meanwhile, the U.S. presidential election has left investors even more uncertain about what economic policy and the health-care system will look like a year from now, and uncertainty discourages risk-taking and capital spending.

2020 seems to be forming a perfect storm of its own kind. A global pandemic, interest rates at zero, an oil price war, and the U.S. presidential election have never happened at the same time, after all. Will that be the recipe for a depression? For now, no one knows.

Write to Evie Liu at evie.liu@barrons.com